2 0 14
ANNUAL REPORTC O N T E N T S
The Sumitomo Business Spirit

02
04

Article 1

Sumitomo shall achieve strength andprosperity by placing prime importance on
integrity and sound management in the
conduct of its business.
Article 2

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

06
08
14

18
20

Financial Summary
A World Leader in the
Non-Ferrous Metals Industry& an Excellent Company ofJapan
Business ProﬁleMessage from the President
Special Feature: Start of
Production at Taganito HPAL
and Establishment of
100,000-tonne Nickel
Production Structure
Projects in Progress

26
28
31

Business Network32

Directors and Audit &Supervisory Board Members

33
80
82

Financial Section

85

Corporate Data and Investor
Information

Corporate GovernanceCorporate Social
Responsibility

Glossary
Consolidated Subsidiaries andEquity-Method Aﬃliates

Review of Operations[“Business Principles” forming the Rules Governing theHouse of Sumitomo (version formulated in 1928)]

SMM Group Corporate Philosophy• Sumitomo Metal Mining Co., Ltd. (SMM), in accordance with theSumitomo Business Spirit, shall, through the performance ofsound corporate activities and the promotion of sustainablecoexistence with the global environment, seek to make positive
contributions to society and to fulﬁll its responsibilities to its
stakeholders, in order to win ever greater trust.
• SMM shall, based on respect for all individuals and recognizing
each personʼs dignity and value, seek to be a forward-minded
and vibrant company.

SMM Group Management Vision• By developing and employing innovative technology, we shall
fulﬁll our social responsibilities as a manufacturing enterprise.
• Based on the principles of compliance, environmental
protection and operational safety, the Sumitomo Metal Mining
Group shall pursue maximum corporate value through theprovision, via its global network, of high-quality materials suchas non-ferrous metals and electronics and advanced materials.

Specialized industry terms: Specialized terms are covered in the Glossary on pages 80 to 81.
Note regarding forward-looking statements: The forward-looking statements in this annual report, including business result
forecasts, are based on information available to the Company and on certain assumptions deemed to be reasonable as of thedate of release of this report. Actual business results may diﬀer substantially due to a number of factors. Unless speciﬁcallystated otherwise, information in this annual report is as of July 1, 2014.

Taganito HPAL Nickel Corporation (Philippines)

01

Financial Summary

Fiscal year

2013

2012

2011

2010

2009

2008

2007

2006

Results for the year (Millions of yen)
Net sales

830,546808,540

847,897864,077

725,827

793,797 1,132,372

966,764

Operating income

75,41895,78588,577

96,03866,265

10,534

155,394

162,632

Recurring proﬁt

114,352

115,034

108,829

123,701

87,791

32,572

217,866

205,285

Income (loss) before
taxes and minority
interests

111,006

122,455

87,962

123,394

82,776

22,942

216,504

205,617

Net income (loss)

80,25886,64065,286

83,962

53,952

21,974

137,808

126,054

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

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

981,458

880,001

1,091,716

929,208

1,019,053

844,547

726,039

684,103629,684

547,251

640,345528,921Long-term debt
due after one year

243,130

212,323

157,119

135,128

132,311

141,716

169,394

93,800Interest-bearing
debt

383,580

330,073

265,951

210,969

200,939

218,534

258,054

189,910

Net assets

145.35
1,653.83

Cash dividends

37.0

Operating Income

155.581,393.02
34.0

116.17
1,173.97
28.0

149.381,121.19
32.0

96.26
1,043.50
20.0

38.87
913.9213.0

238.13
1,017.96
30.0

220.49859.82

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

1,000

150

150

800

120

120

600

90

90

400

60

60

200

30

30

0

0
2010

2011

2012

2013

0
2010

2011

2012

(FY)

Total Assets /Equity Ratio

Amounts per share (Yen)
Net income

Net Sales

2013

2010

2011

2012

2013

(FY)

Net Assets(FY)

Net Income /Cash Dividends per ShareTotal assets (left scale)

Net income (left scale)

Equity ratio (right scale)

Cash dividends per share (right scale)(¥ billions)(¥ billions)(¥ billions)

2,000

(%)

100

1,500

100

50

(Yen)

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

27.0

Key ratios (%)
ROA

5.49

6.94

5.94

8.26

5.80

2.23

13.64

14.81

ROE*

9.54

12.13

10.12

13.80

9.89

4.02

25.39

28.99

Equity ratio*

58.1

56.9

57.5

59.9

59.8

57.3

54.0

53.4

Interest-bearing debt
to total assets ratio

24.4

24.4

23.2

20.0

20.5

24.8

23.6

20.4

Debt-to-equity
ratio* (times)

0.42

0.43

0.40

0.33

0.34

0.43

0.44

0.38

*Shareholdersʼ equity is deﬁned as follows: Shareholdersʼ equity = Total shareholdersʼ equity + Accumulated other comprehensive income

0
2010

2011

2012

2013
(FY)

02

0

0
2010

2011

2012

2013
(FY)

2010

2011

2012

2013
(FY)

Hishikari Mine (Japan)

03

Long-Term Vision

A World Leader in the No n-Ferrous Metals Industry& an Excellent Company of Japan
Sumitomo Metal Mining Co., Ltd. (SMM) aims to becomea World Leader in the Non-Ferrous Metals Industry andan Excellent Company of Japan by promoting acontinuous growth strategy while deploying advanced
technical capabilities cultivated over a history of morethan 400 years.

Long
g-Ter
Term
m Vi
Visi
sion
si
on

Become a World Leader
in the Non-Ferrous
Metals Industry and an
Excellent Company of
Japan

FY
F
FY20
Y20
2013
13-2
-201
201
015
12 3-Y
Yr Bu
usi
sine
ine
ness
s Plann

F 010
FY2
01 -202012
12
2
09 3-Y-Yrr Busi
Busi
usinesnes
esss PlanagyteStrengthen
trengthenhenglobalgloba
obal
competitivenessmpetitiveness
mpe

h

wt

us

o
gr

a
str

uo

in
nt

■ Long-Term Vision Targets
World
Wo
d Le
Lead
ader
ad
er in th
the
e No
on
n--Ferrrou
o s Metals Ind
ndus
usttry
us
tr y

Copp
per

NickelAnnuala
Prrod
o uctiono Interest

Annu
An
nual
al
Prod
Pr
oduc
ucti
tion
on Capapac
acitt ykt

Production at the Tag
ganito Pro
Projecjectt started in
the second half of 2013,
13 br
broad
oadenien ng
g our annual
nickel production
nic
on strstructuctureure to 10100
0,000 tonnes.
Our goal is to fur
furthether expand our capacity to
150,000
0 tonnto es, wi
withth a focus on development
iniitiatives
es suisuitabtable
le for application of our HPAL
tec
echno
hno
olog
logy.
y

SMM
MM is pu
purs
ursu
rsuinging ininves
vestmetm nt in overse
eas
s min
m ing
n projects. In
201
0 1, wee acqacquiruired
ed an int
intereer stt in Chi
Ch leʼ
es S
eʼ
Sier
erra
ra Go
G da Project.
Gor
We curWe
currenrentlytly hohold
ld intin ereerestssts in cocoppe
pperr minemines
s locatedlt in the US,
Ch le, Pe
Chi
Peru,ru, AuAustrstralial a,a and otother
her cocount
untrieunt
riies. Grie
Goioing forward, we
willl seek
wilseek to pa
parti
rticipcipateate in ne
ew deveelop
lo me
ment projects, expand
producpro
ductiotion
n at
at exisexistinting
g minemin s,s andnd ta
ake othher steps to raise
our anannua
nuall copp
coppper produc
pper
pro
roductio
ductioion
on intentteeres
r t toreto 300,0 000 tonnes.

Gold

Annu
An
nual
al
P od
Pr
oduc
ucti
tion
on Intterres
st

kt

New
Materialst

SMM owSMM
owns thowns
the Hi
Hishi
shi
h kar
karii Minee, thhe onlhe
nly comm
comommerc
erc
cia
ial
a ly
ly opeopoper
p rateed metal mine in Ja
Japan
pan
pa
an. We also
s op
so
opera
erate
era
te the Po
Pogo
go GolGoldGod
M e in Alas
Min
aska,
a
ka US.
US. Usin
US
Usin
sing
g our
our accumu
accumuacc
umulatlat
ated
ed exppert
ertiseise in
min
in
ne op
oper
peratierati
at on, we araree seekseeking
ng to
o rra
aise
se ou
ourr annu
annuala gol
g dgo
prroduc
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d tio
du
t n inte
interes
re t toto 30 ttonn
onn
n es,
s, pr
princ
princ
incipaipallylly thhrou
r gh newew
w
miine deve
min
e lop
lopmenment.

¥billionrecurring
proﬁt

Th
Thr
h ougho gh coll
oug
coll
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lllab
abo
borat
rat
ation
ion
n betwe
betwe
be
tween
en theentth
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aterial
ter
erial
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ials
ia
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Divisi
Div
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ch & DeDevel
elopm
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ent
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vision, wesio
e aim to accelera
e te newnmaterialss devede elopment
opm
ent
nt an
and
nd raisaise
se proﬁ
ro
ro
oﬁtab
abili
a
ill ty
ty
ty.
y.

E ce
Ex
cell
cell
llen
entt C
en
Co
ompan
mpa
mp
an
ny of
of Jap
apan
an

o

F Y2
FY2
20
004
0 -20
-2009
09
03 & 06 3 -Yr
03
Yr
Y
Bus
B
us
sine
ine
ne
es
ss
s Pla
P ns
ns

Strengthen
platform for global
competition

e
ut

ac

N t
Ne
sale
sa
les
le
s

ec

Ex

■ 2012 3-Year Business Plan Strategies
Research and Development
Accelerate development of new products in material businessTechnical innovation in mineral resources, smelting & reﬁning
Promote process development¥1trillion¥100 billion

Nett
Ne
inco
in
ome
m

Segment Proﬁt

Financial Strategy■ Mineral Resources ■ Smelting & Reﬁning■ Materials ■ Other ■ Adjusted amount■ Total assets
Equity ratio(¥ billions)(¥ billions)

150

1,800

125

1,500

100

1,200

Financial Strategy

75

900

Maintain sound ﬁnancial constitution

50

600

25

300

0

0

Maintain ample liquidity to support
large projects
Maintain minimum consolidated
equity ratio of 50%

Dividend Policy
Continue in line with business results
Investor return: Raise consolidated
dividend ratio from minimum 20% tominimum 25%

-25

2012

2013

■ Interest-bearing debt
Debt-to-equity ratio■ Shareholdersʼ equity
ROE
Equity ratio: 61% (%)(trial calculation)75

Debt-toequity ratio:
0.35 (trial
50
calculation)
ROE:
12% (trial 25
calculation)

2010

2011

2012

2013 12 3-Yr Plan
2015

(FY)

0

12 3-Yr Plan (FY)2015

Taganito HPAL Nickel Corporation (Philippines)

04

05

Business ProﬁleBusiness ProﬁleUnder our long-term vision
to be a World Leader in the
Non-Ferrous Metals Industry
and an Excellent Companyof Japan, we are expanding
our scope of operations to
the entire globe.
SMM is pursuing an integrated business that
ranges from primary upstream manufacturing
processes, including resources development,
non-ferrous metal reﬁning, and the development of electronic and functional materials
using the most advanced technologies, to thedevelopment and sale of metal materials thatare indispensable for daily life.
SMMʼs strengths include its Technology andR&D Expertise, Capacity to Expand Business
Globally, and Sound Financial Position. SMM
focuses its management resources in threecore business areas: Mineral Resources, Smelting & Reﬁning, and Materials, and is reinforcing
its competitive capabilities.

Leveraging our competitive
advantage in metals to expand
our business to theenvironmental and energy ﬁeld
Unsurpassed hydrometallurgicaland pyrometallurgical technology
Development capabilities
cultivated over many years
in Japan and overseas

MineralResources
Business
Developing
and mining
resources

Smelting &Reﬁning
Business

Stable raw materials
supply for the Smelting& Reﬁning business

Extracting
metalsfrom ore

Materials
Business

Supplying quality
metals to theMaterials business

Addingvalue
to metals

Technology andR&D Expertise

SMMʼs Core
Advantages

Capacity to
ExpandBusiness
GloballySound
Financial
Position

06

Promoting Expanded Proﬁtability:
Shifting from Raw Material
Procurement to Resources
Development and Mine Management

Cost-Eﬃcient Operations
with World-Leading
Smelting andReﬁning Technology

Building a Deeper
Relationship with
Our Valued Customers

To adapt to the changes in our business environment, SMM is increasing the supply of raw
material to its Smelting & Reﬁning business. In
addition, we are aiming to increase revenues
from our mineral resources business. We willleverage our accumulated technical expertiseto promote prospecting activities and participate in new development discussions, and will
strive to acquire majority production interests.

For nickel, we are using HPAL technology to
produce intermediates from low-grade ore in
the Philippines. We then reﬁne these intermediates into electrolytic nickel in Japan. SMM isJapanʼs 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.

In the 1960s, SMM leveraged its accumulated
metals technology to enter the electronics
materials business. Now we are promoting advanced material development in the ﬁeld ofenvironmental 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 with signiﬁcant success in theUS.

07Message from the President

There seem to have been three overarching aspects
aﬀecting the management of the companyʼs businessaﬀairs: attainment of proﬁts, response to new resource
nationalism, and building ties of trust with society.

Fiscal 2013 In Retrospect
A year has now passed since I took up the

The rise of new resource nationalism in re-post of SMMʼs president, and looking backcent years has generated new country risks

over the past year there seem to have been

for SMM that today are demanding robust re-three overarching aspects aﬀecting the man-sponse ‒ an issue of major importance toagement of the companyʼs business aﬀairs:

company management. In Indonesia, for ex-

attainment of proﬁts, response to new re-ample, a new mining law took eﬀect in Janu-source nationalism, and building ties of trustary 2014 prohibiting the export of unpro-

with society.

cessed mineral products such as nickel ore.

In terms of securing proﬁts, during the past

Movements are also under way in a number ofyear we proactively pursued involvement incountries to review legal frameworks in orderlarge-scale projects and sought maximum cost

to promote investments from overseas.

reductions and higher productivity in business

To respond to situations such as these, theundertakings already in progress. Together

need for SMM to form ties of trust with soci-these eﬀorts enabled the company to record

ety are becoming ever more important. Un-

more than 100 billion yen in recurring proﬁt forless we are able to establish a business model

the fourth consecutive year. Securing proﬁts is

enabling win-win relationships for both theextremely important in order to ensure thatcompany and the countries and communities

SMM will have the ﬁnancial means to pursue

we deal with, we will be unable to succeed inlarge-scale capital investments and to invest in

business. All too cognizant of this fact, as weoverseas mines, etc. Inevitably the company ismove forward we must devote ourselves evenimpacted by external factors such as metal

more than before to forging solid ties of trust

prices and ﬂuctuations in exchange rates, but

between SMM and the people in the countries

going forward we will continue to secure stable

andproﬁts through sustained eﬀorts in aspects

projects.

regions

where

we

are

undertaking

such as cost reductions.

Yoshiaki Nakazato
President & Representative Director

08

09

Message from the President

The completion in June 2013 of the plant constructed for
the Taganito Nickel Project enables the establishment ofa system capable of producing 100,000 tons of nickel
annually.

Review of Fiscal 2013 and Business Strategies for Fiscal 2014
In ﬁscal 2013 SMM registered consolidated

Gorda Copper Mine Development Project

recurring proﬁt totaling 114.4 billion yen.

under way in Chile. Plans presently call for

Although declining metal prices during thecopper production to commence during ﬁscal

year had a signiﬁcant negative impact, the2014 at an annual rate of 110,000 tons, withﬁnal result was virtually unchanged from thecapacity to be progressively expanded topreceding year. The companyʼs various busi-

220,000 tons. After production begins, we will

ness strategies scored varying degrees ofstrive to enhance the projectʼs proﬁts throughsuccess, but recurring proﬁt topped 100

maximum suppression of operating costs.

billion yen for a fourth straight year despite
the severity of the external environment.

Expansion projects are also moving steadily
forward at the other copper mines into which
SMM has made capital investments, and theseMineral Resources

operations are expected to contribute to

The most important undertaking in the Min-

company proﬁts also.

eral Resources segment today is the Sierra

Recurring proﬁt topped 100 billion yen for a fourthstraight year despite the severity of the external
environment.

Smelting & Reﬁning

example ‒ as a vital part of our quest to

A major event in the Smelting & Reﬁning seg-achieve our long-term vision to achieve anment during ﬁscal 2013 was the completion in

annual production capability of 150,000 tons,

June 2013 of the plant constructed for the

enabling SMM to enter the ranks of the top 5

Taganito Nickel Project. In ﬁscal 2014 thenickel producers and thus become a “World

plant will shift into full-scale production at a

Leader in Non-Ferrous Metals.”level of 30,000 tons per year, thereby
enabling the establishment of a system

Materials

capable of producing 100,000 tons of nickel

Earnings from the Materials business recov-

annually. The Taganito Project is garnering

ered substantially in ﬁscal 2013, accompanied

robust attention locally in the Philippines, inby a signiﬁcant improvement in our net proﬁt

recognition of which we intend to continue

to sales ratio. These achievements were real-making every eﬀort to contribute fully to theized as a result of various structural reforms,

local society as a way of building solid ties ofincluding the withdrawal from low-productivity

trust.

products and a shift to areas with excellent

This past year also saw the completion of

growth potential. We believe it will be impor-reinforcement work at the Niihama Nickel Re-

tant also to incorporate new ideas and imple-

ﬁnery, where the intermediate produced atment diverse measures in a quest to reduce

Taganito are transformed into ﬁnished prod-

costs as a way of underpinning our bottom

ucts. At the Harima Smelter, the process forline.

manufacturing nickel sulfate directly from the

The Materials business has emerged fromintermediate products produced at Taganito

its temporary period of adversity and earn-

was brought to completion.

ings are now trending upward. By faithfullyOn the back of the Taganito Project and theexecuting crucial strategies, we will proceed

expansion work at the Niihama Nickel Reﬁn-

forward toward achieving the targets set in

ery, going forward we will continue other ma-

our 2012 3-Year Business Plan and pursuing

jor nickel project feasibility studies ‒ for thefurther growth beyond.

Pomalaa Project under way in Indonesia, for10

11

Message from the President

Future Priority Measures
Research & Development
As a follow-up to the establishment in 2012 of
the new Materials Research & Development
Center, in 2014 we are opening a Mineral Resource & Hydrometallurgy Process Center. In
this way we will further burnish our technological capabilities that are both SMMʼs underlying strength as well as the source of ourcompetitive power.
The new Resource & Hydrometallurgy Process Center will be in charge of developmentof the worldʼs most advanced processing andequipment technologies in the areas of mineral resources and smelting and reﬁning. Research and development facilities relating tomaterials, including the Materials Research &Development Center, will undertake the development of products for environmental andenergy applications, as well as seek solutions
for miniaturization of ﬁnished products andhigher communication speeds. These advances will be applied to the achievement ofeven lower costs and the development of
products for the future.
Development of Human Resources
My personal conviction is, and always has
been, that employees are of essential importance to a company. At SMM, attention tends
of focus on our technological staﬀ; but I believe our sales teams deserve equal recognition for the excellent work they perform. Especially as all of our operations become increasingly globalized, in addition to cultivating
human resources as we always have, an issueof equal urgency is to strengthen the functions of the Head Oﬃce in this respect. In re-sponse, today we are debating how to achieve
the optimal personnel system from the perspective of diversiﬁcation: hiring workers irrespective of their nationality, promoting theactive participation of women, etc. The results of these diversiﬁcation initiatives will
become evident, over time, starting verysoon.
“Respect for human resources” is a vital
part of Sumitomoʼs Business Spirit. Throughout our history, the development and active
utilization of human resources has always
been viewed as the most important factor
behind the companyʼs growth. To carry out
this thinking today, I want SMM to be a company that employees will be excited to workfor, a company where every workplace will be
staﬀed by vibrant employees who ﬁnd theirwork personally rewarding. In achieving sucha company and such workplaces I believe
rests the ability of SMM to respond to thehopes and expectations of our shareholders
and all other stakeholders.
CSR Stance
Making social contributions through our business operations is the foundation of SMMʼs
CSR commitment, and carrying out this commitment is of extreme importance for us. Our
business is viable only when we, as a company, enjoy the trust of society, and when we
pay due attention to environmental needs.
For this reason, I believe that it is absolutely
essential for us to build solid connections withsociety and earn societyʼs trust through activities that enhance our relationship tosociety.

ʻRespect for human resourcesʼ is a vital part of
Sumitomoʼs Business Spirit. Throughout our history, thedevelopment and active utilization of human resources
has always been viewed as the most important factor
behind the companyʼs growth.
12

Based on the Sumitomo Business Spirit ‒ the foundationof our business philosophy for four centuries ‒ going
forward we will continue the steady advancement of our
growth strategies.
Financial Policies
In our 2012 3-Year Business Plan we pledged

expectations of our shareholders and inves-to keep our equity ratio above 50%, and thistors, we will steadily implement measures

ﬁnancial policy will be maintained. We havetoward achieving our net income target of

also already raised our dividend payout ratio

100 billion yen in ﬁscal 2015, the ﬁnal year of

to more than 25%. In order to respond to thethe current 3-Year Business Plan.

Message to Shareholders and Investors
SMM believes that enhancing our enterprisewill continue the steady advancement of ourvalue is the best return we can oﬀer to our

growth strategies and respond faithfully toinvestors. Based on the Sumitomo Businessthe trust and expectations of our sharehold-

Spirit ‒ the foundation of our business phi-

ers and investors.

losophy for four centuries ‒ going forward weAugust 2014

Yoshiaki Nakazato, President & Representative Director

13Special Feature

Start of Production at Taganito HPAL andLuzon

BaguioEstablishment of
100,000-tonne Nickel
Production Structure

ManilaPalawanPuerto Princesa

On October 21, 2013, a ship left the Philippines for Japan.
It was carrying the first shipment of mixed sulfide (MS, a mixture of nickel and cobalt sulfides)
produced at Taganito HPAL.
Four years after plant construction was decided in 2009, this represented a major step forward
for SMM as a world leader in the non-ferrous metals industry.

HPAL Technology

Taganito
HPAL

Mindanao

Davao

Establishing the Technology at Coral Bay

As its name indicates, the High Pressure Acid

2000 or so. Once these ancillary technologies

Coral Bay Nickel Corporation (CBNC) was SMMʼs

was the support of Nickel Asia Corporation (NAC),

Leach (HPAL) technology uses sulfuric acid in awere ready, SMM reached an decision to build afirst HPAL plant, constructed adjacent to the Rio

owner of the Rio Tuba Mine and the largest nickel

high-temperature, high-pressure environment toplant using HPAL technology on the Philippine is-

Tuba Mine on Palawan Island. Commercial produc-mining company in the Philippines, as a partner inleach nickel from low-grade ore to produce aland of Palawan. SMM has been engaged in nick-tion began in April 2005 on a single line with athe project. The plantʼs success represents a major

higher-grade intermediate. A special feature ofel smelting and refining since the 1930s and has

capacity of 10,000 tonnes per year. Once stable

growth driver forthis technology is its ability to process low-gradea considerable amount of accumulated exper-

production was achieved, construction began on a

SMM, as it enables

oxide ore. Large deposits of such ore can betise̶for example, it began using Matte Chlorine

second line in 2006. Today Coral Bay has an annual

us to produce large

found close to the earthʼs surface but are diffi-

Leach Electrowinning (MCLE) technology, which

production capacity of 24,000 tonnes.

amounts of nickel

cult to process by other means.

requires advanced operations technology, in the

CBNC was the worldʼs first successful plant usingfrom low-grade ore

1980s̶and it was determined that this expertise

HPAL technology. The deployment of SMMʼs smelt-that our competi-

would make HPAL production possible.

HPAL technology itself actually dates back to

ing and refining technology, which has been accu-

tors have difficultyerations technologies required for large-scale

mulated over many years, was one factor in this,processing.

production were not fully mature until the year

but another major reason for the plantʼs successthe 1960s, but the facilities engineering and op-

04
14

Coral Bay Nickel

Cebu

Coral Bay Nickel Corporation(Philippines)

05
15

Special Feature Start of Production at Taganito HPAL and Establishment of 100,000-tonne Nickel Production Structure

Taganito ProjectIn 2007, when the second production line at Coral

opening ceremony was held with attendance

to ensure optimal plant operation, such as rein-

Smelter in Japan. At the Niihama Nickel Refineryfrom key figures including representatives of theforcement of processes that could pose potential

it is refined into electrolytic nickel using thePhilippine government and local community.

bottlenecks on the production lines.

MCLE process, and chemical products such as

Bay was under construction, SMM and NAC,
aiming for further expansion of their nickel busi-

Special Characteristics of Taganito HPAL

nickel sulfate are also produced. The Harimafrom Coral Bay in collaboration with SMM staff

Smelter has been processing zinc since 1966,

from Japan. The smelting and refining technology

and in 2014 it began producing nickel sulfate di-whether or not another HPAL plant could be built

Taganito HPAL occupies a site of approximately

they were trained in at SMM in Japan, and which

rectly from MS using the latest facilities.

adjacent to NACʼs Taganito Mine on the Philip-

750,000 m2. MS (Mixed sulfide: a mixture ofthey honed at Coral Bay, is now behind operations

pine island of Mindanao. The smelting and refin-

nickel and cobalt sulfides) produced here makes

at Taganito.

ing process must be adjusted to fit the physicala journey of around a week from the nearby port

properties and quality of the ore, particularly for

to Japan. The plant at Taganito HPAL uses thehydrometallurgical process. The study showed

latest HPAL technology, maximizing on our opera-that ore from Taganito was similar to that at Coral

tional experience at Coral Bay. It has two HPAL

Bay. Based on this finding, the Taganito Projectproduction lines, each with 15,000 tonnes of

was formally launched in partnership with NAC

annual capacity. The smelting and refining pro-

The MS produced at Taganito and Coral Bay has

and Mitsui & Co., Ltd. in 2009. In September

cess has been optimized for the ore froma nickel grade of 55% to 60%, and is transported

2013, after a four-year construction process, anTaganito and measures have been implemented

to our Niihama Nickel Refinery and the Harima

ness, began a feasibility study to determine

Taganito HPAL Plant Opening Ceremony

16

Taganito HPAL was set up by Philippine staff

With these efforts, SMM has achieved its intermediate goal of an annual nickel production
capacity of 100,000 tonnes. An annual production

Completion of 100,000-tonne Nickel
Production Capacity, Looking to
150,000-tonne Capacity

capacity of 150,000 tonnes is part of SMMʼslong-term vision under the current 2012 3-YearBusiness Plan. Going forward, SMM will continue
to apply its technical strengths to solidify its position as one of the worldʼs top nickel producers.

Taganito HPAL Nickel Corporation (Philippines)

17

Projects in Progress

Smelting & Refining

Mineral Resources

Name

2010

2011

2012

Participationagreement

2013

2014

Cu

Sierra Gorda Project

Cu

Morenci Mine
Expansion Project

Cu

Cerro Verde Mine
Expansion Project

Au

Hishikari Mine

Au

Pogo Gold Mine

Au

Stone Boy ProjectBegin Alaska gold prospecting

Ni

Taganito Project

Construction completed

Ni

Capacity expansion at
Niihama Nickel Refinery

NickelsulfateMaterials

2009

Phase 1 startup(annual capacity: 110,000 tonnes)

Start of production
Phase 1 ramp-up

Outlook
Phase 2 startup

Completion of plant expansion,
begin full production (planned)
Start of construction on expansion
project[2016]
Full-scale production
capacity

Start ofconstruction fordeeper ore bodydevelopment plan

Planned start of deeper
ore body mining

Increasedinterest from
51% to 85%

41,000-tonne
capacity
structurecomplete

Begin mining in East Deep section

65,000-tonne
capacity
structureinvestment
decidedHarima Smelter(increase production of nickel sulfate)

Battery materials(increase production of lithium nickel oxide)

Full operation of 30,000-tonne
annual production structure

Shift to 36,000-tonne
capacity structure

65,000-tonne capacity structurecomplete
Receipt of Taganito raw material

Construction complete
Receipt of Taganito raw material

Start of production

Production expansion decided

Complete construction,
begin full operation

Capital Expenditure Plan
Other
Materials

12 3-Yr Business Plan
(3-year total)

140
260

MineralResources
480

170
billionyen
350
Smelting& Refining(domestic
and other)

Smelting& Refining
360
110

Smelting & Refining(CBNC)

18+

Acquisitionof overseas
production
interests

Smelting & Refining(Taganito)
Sierra Gorda Project (Chile)

Taganito HPAL Nickel Corporation (Philippines)

Nickel Sulfate Plant, Harima Smelter (Japan)

19

Review of Operations: Mineral Resources Business

Review of Operations

Mineral Resources Business
Sumitomoʼs Mineral Resources business got under way in the mid-17th century. In 1691,
operations began at the Besshi Copper Mine, one of the richest in the world at that time.
The expertise cultivated through those operations was applied to the Hishikari Mine,
which opened in 1985. Today, SMM is engaged in exploration and development activities
around the globe.
Net Sales

Fiscal 2013 Review
During the term, operations at Hishikari Mine proceeded on astable basis, producing 7.0 tonnes of gold. A rise in the ore
grade at the Pogo Gold Mine resulted in increased production
from the previous year, reaching 10.5 tonnes.
Overseas, copper production at Morenci Mine was alsostable. While copper output from the Candelaria Mine rose
thanks to a rise in the ore grade, output fell at the Cerro Verde(¥ billions)

150

Segment
Proﬁt

104.87(¥ billions)100

113.90(¥ millions)

30,000

69.06

66.11

19,387

50

75

63.2%

Capital Expenditure /Depreciation

Segment Proﬁt

15,000
8,987
6,524

0

2012

Mine mainly due to a decline in the ore grade.

2013

(FY)

0

2012

2013

0

(FY)

2012

8,782

2013

(FY)

■■ Capital expenditure■■ Depreciation

Outlook
Exploration Costs

Production began at the Sierra Gorda Mine in August 2014, andwe will continue working to reach full-scale production. The

SMMʼs Metal Interests by Mine(¥ billions)8

expansion project at the Morenci Mine has almost been com-

170

6.4
5.5

pleted. and we will bring the facility on line and move toward
full-scale production. We are also advancing work on the Cerro(gold: t)

200
144

5.4

4

100

Verde Mine expansion, aiming for completion in 2016.

Note:

Hishikari Mine

Projected gold production during ﬁscal 2014 is 6.5 tonnes at

Recoverable metal, JIS standard: 170 t

the Hishikari Mine and 10.7 tonnes at the Pogo Gold Mine.

Pogo Gold Mine0

Elsewhere, we will also continue to actively explore thevicinity of operating mines, as well as evaluate possible
Gold ore (Hishikari Mine)

participation in development projects.

2012

2013

2014
Planned(FY)■ New deposit exploration■ Exploration around existing mines0

HishikariPogo(as of December 31, 2013)

Reserve: 59 t
Resource: 85 t
(Canadian standard)

Copper Mine Project
Sierra Gorda Project

20

The Sierra Gorda Project is a copper mine develop-

Toyo Smelter & Reﬁnery. This will have the advan-

ment project in the Republic of Chile being carried

tage of providing stable supply for our Smelting &out with KGHM Polska Mied㶈 S.A. of Poland. In May

Reﬁning business.

2011, SMM concluded an investment participation

This mining development project was substan-agreement with Quadra FNX Mining Ltd., currently

tially completed in August 2014 and has started

a subsidiary of KGHM.

production of copper concentrates. We will work

In addition to our production interest in the proj-

toward startup of full production, and collaborate

ect, SMM has a 50% copper concentrates oﬀ-takeclosely with KGHM to promote the second phaseright, and this concentrate will be supplied to the

expansion project currently planned.

Location

Region 2 of the
Republic of Chile

Start of
Production

2014

MinableOre

Approx. 1.3 billion tonnes(sulﬁde ore only)

Mining andMilling
Methods

Open-pit mining andconventional ﬂotation
methods

Metal
VolumeContent

Copper: 5 million tonnes
Molybdenum:
300,000 tonnes

AverageAnnual
Production

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

Mine Life

20 years

EquityInterests

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

21

Review of Operations: Smelting & Refining Business

Review of Operations

Smelting & Reﬁning Business
SMM smelts and reﬁnes raw materials procured from a variety of sources into suchmetals as copper, nickel, and gold. SMM possesses world-class smelting and reﬁning
technologies and has forged a solid position within its industry. As an example, SMM
became the ﬁrst in the world to successfully commercialize HPAL technology for therecovery of nickel from low-grade ore, which had been diﬃcult with conventional
technologies.

Fiscal 2013 Review

SMMʼs Nickel Business
SMM produces electrolytic nickel, nickel
chemical products, and ferronickel. Electrolytic
nickel, nickel sulfate, nickel chloride, and otherproducts are produced at our Niihama Nickel
Reﬁnery. Nickel sulfate is also produced at theHarima Smelter, while ferronickel is produced
by Hyuga Smelting Co., Ltd.
The principal raw material for electrolytic
nickel and nickel chemical products is MS produced by Coral Bay Nickel Corporation andTaganito HPAL Nickel Corporation. The Niihama
Nickel Reﬁnery uses the MCLE method to
reﬁne MS, which has an ore grade of 55% to60%, as well as nickel matte and other raw materials to produce 99.99% grade electrolytic
nickel and other chemical products. In addition,
the Harima Smelter produces nickel sulfate
from MS. Combined total production of elec-

Segment
Proﬁt

Due to maintenance work carried out every other year,
production at the Toyo Smelter & Reﬁnery fell compared to theprevious term. Electrolytic copper production decreased by
35,000 tonnes, to 401,000 tonnes.
Work to expand production capacity at the Niihama Nickel
Reﬁnery from 41,000 tonnes to 65,000 tonnes was completed
during the term. Furthermore, thanks to the launch of Taganito
HPAL, which supplies the reﬁnery with nickel intermediates,
production of electrolytic nickel rose signiﬁcantly. Electrolytic
nickel production for the year under review totaled 50,000
tonnes, up 9,000 tonnes from the previous term. Ferronickel
production at Hyuga Smelting Co., Ltd. was roughly the sameas during the previous term at 22,000 tonnes.

26.7%

Outlook■ Nickel Production Flow

SMM will continue to reinforce its cost competitiveness incopper smelting to maintain a stable proﬁt structure.
Taganito HPAL will operate throughout the year, and production of electrolytic nickel during ﬁscal 2014 is projected toincrease to 58,000 tonnes, up 8,000 tonnes compared to theprevious term.

Electrolytic nickel

Rio TubaMine(¥ billions)(¥ billions)

50
40.65

631.84(¥ millions)

50,000

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

Nickel sulfate

HarimaSmelter
NickelsulfateIsouraPlant

Taganito
HPAL
NickelNickel matte

Capital Expenditure /Depreciation

Segment Proﬁt

800

Coral
Bay
NickelNiihamaNickelReﬁnery

PT ValeIndonesia,
othersBatterymaterials

NickelsulfateElectrolytic nickel(nickel grade: 99.99%)

Customers

Net Sales

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

MS(nickel grade:approx.
55% to 60%)

TaganitoMine

637.80trolytic nickel and nickel chemical products forﬁscal 2014 is projected to be 68,000 tonnes ofnickel equivalent.
Nickel sulfate produced at the Niihama Nickel
Reﬁnery is sold to customers and also transported approximately ﬁve kilometers to theIsoura Plant, where it serves as a raw material forbatteries produced by our Materials Division.
The raw material for ferronickel is nickel ore
with a grade of approximately 2%. Until ﬁscal
2013, approximately 40% of the raw material
we used came from Indonesia. However, the
new mining law in Indonesia eﬀective fromJanuary 2014 has halted imports of this ore. By
accessing raw material from the Philippines andother sources, we expect to maintain ﬁscal
2014 production at approximately 22,000
tonnes.

Other chemical products

Other raw materials

40,14634,656
29.10

400

20

New Caledonia
and Philippine
nickel mines

25,00012,169

0

2012

2013

(FY)

0

2012

2013

(FY)

0

2012

13,3902013

Nickel ore

Hyuga
Smelting
Co., Ltd.

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

22

23

Review of Operations: Materials Business

Review of Operations

Materials Business
A wide range of metals are used in the manufacture of electronic equipment. Copper,
for example, 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 business since the 1960s and will continue to process and supply advanced
metal products by leveraging its accumulated technologies.

Fiscal 2013 Review

Battery Materials
Nickel hydroxide is used as a cathode material in nickel metal hydride batteries, which
are used in leading hybrid vehicles. SMM
products boast a commanding share of themarket for this material.
Lithium nickel oxide serves as a secondary
battery cathode material for compact batteries. This material enables the productionof batteries with high recharging eﬃciency.
Users of electric vehicle batteries demand
increased capacity to realize longer range.

Segment
Proﬁt

Demand for battery materials for hybrid and electric vehicles

10.1%

was strong during the term. Demand was also healthy for
leadframes widely used in semiconductor devices, as well as
electronic pastes for tablet devices and smartphones.
The decrease in sales for the segment was due to our with-

SMM is promoting R&D to achieve further
improvements in nickel battery materials.

Nickel hydroxide

drawal from the gold bonding wire business in ﬁscal 2012.

Leadframes
Leadframes are components used in semiconductor packages, such as integrated circuits, to connect semiconductor chips withexternal wiring. In ﬁscal 2013, we launched
SH Materials Co., Ltd., a new company combining our own leadframe business with thatof Hitachi Metals, Ltd. The SH Materials
Group currently has the worldʼs top leadframe share, and provides a wide range of
products to manufacturers in China andelsewhere in Asia.

OutlookIn the ﬁeld of battery materials, we completed our production
capacity expansion of nickel lithium oxide in June 2014, raisingmonthly capacity from 300 to 850 tonnes. The nickel lithiumoxide we produce is used in batteries for electric vehicles
manufactured by Tesla Motors, Inc. of the US.
Going forward, we will continue investing resources in prod-

Leadframes

uct development in the ﬁelds of environment and energy, where
growth is expected.

Battery materials (Isoura Plant)

Net Sales

Segment Proﬁt(¥ billions)200
156.61

Capital Expenditure /Depreciation(¥ billions)15

153.33

11.07

100(¥ millions)

12,0008,379 8,007
8,221
6,811

7.5

6,000
3.30

0

2012

2013

(FY)

0

2012

2013

(FY)

0

2012

2013

(FY)

Catalyst Business
N.E. Chemcat Corporation is a joint ventureof SMM and BASF SE of Germany, one of theworldʼs leading chemical companies. As an
SMM aﬃliate, N.E. Chemcat is one of Japanʼslargest developer-manufacturers of precious
metal catalysts, for purifying hazardous substances in automobile exhaust gases, andchemical catalysts for petrochemicals, pharmaceuticals, aromatic chemicals and otherpurposes. N.E. Chemcat will continue toutilize its accumulated catalyst technology todevelop 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
petroleum hydrogenation and hydroprocessing catalysts, oﬀers oﬀ-site catalyst regeneration, provides other technical services,
and is engaged in related 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.

■■ Capital expenditure■■ Depreciation

24

25

Business
B
iN
Network:k SMM MinesMiandd Smelters/Refineries
S
l
/R fi
i
Materials Business: Major Affiliates & Sites

Business Network

SMM Mines and Smelters/ Reﬁneries
MineralResources Business

Pogo (85.0%)

Besshi-Niihama District Division

Smelting &Reﬁning BusinessToyo Smelter & Reﬁnery
Niihama Nickel Reﬁnery
Shisaka Smelting Co., Ltd.

CopperCopperGold

NickelHarima Smelter
Hishikari Mine

Other
Morenci (12.0%)

Head Oﬃce

Other Major Site /Aﬃliated Company
Figures in parentheses indicate percentage interest

Hyuga Smelting Co., Ltd. (60%)
Jinlong Copper Co., Ltd.
(27.1%)

Nickel Asia Corporation (25.7％)
Taganito HPAL Nickel Corporation(62.5%)

Coral Bay Nickel Corporation(54.0%)

Sorowako (20.1%)

Cerro Verde (16.8%)
Batu Hijau (3.5%)

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
1
1 Sumiko Kunitomi Denshi Co., Ltd. 13 Nittosha Co., Ltd.

25 Sumiko Advanced Materials (Suzhou) Co., Ltd.

2 SMM Precision Co., Ltd.

14 SumikoTec Co., Ltd.

26 SH Electronics Chengdu Co., Ltd.

3 GRANOPT Co., Ltd.

15 Shinko Co., Ltd.

27 SH Precision Chengdu Co., Ltd.

4 SH Precision Co., Ltd.

16 Isoura Plant

28 Dongguan Sumiko Electronic Paste Co., Ltd.

5 SH Copper Products Co., Ltd.

17 Niihama Electronics Co., Ltd.

29 SH Electronics Taiwan Co., Ltd.

6 Ome District Div.

18 Niihama Materials Co., Ltd.

30 Taiwan Sumiko Materials Co., Ltd.

7 SH Materials Co., Ltd.

19 Ohkuchi Electronics Co., Ltd.

31 Malaysian SH Electronics Sdn. Bhd.

5

8 N.E. Chemcat Corporation

20 Ohkuchi Materials Co., Ltd.

32 Malaysian SH Precision Sdn. Bhd.

6, 7, 8,9, 10, 11

9 Nippon Ketjen Co., Ltd.

21 SMM KOREA Co., Ltd.

33 Malaysian Electronics Materials Sdn. Bhd.

10 Sumitomo Metal Mining

22 Shanghai Sumiko Electronic

34 SH Asia Paciﬁc Pte. Ltd.

21
22, 23,24, 2526, 2728

2, 3

29, 304
15
16, 17, 18

12, 13, 14

Siporex Co., Ltd.

31, 32, 33
19, 20
34

26

Paste Co., Ltd.

11 Sumico Lubricant Co., Ltd.

23 SH Electronics Suzhou Co., Ltd.

12 Sagami Plant

24 Suzhou SH Precision Co., Ltd.

27

Corporate Governance
SMM is committed to building and developing an outstanding corporate governancestructure and systems that balance the requirements of maximizing enterprise value
and securing a sound ﬁnancial position as a part of eﬀorts to garner the trust and fulﬁll
the expectations of all stakeholders including shareholders.

Basic Policy Stance, Structure and Systems
The SMM Group views corporate governance as a disciplinary framework both for maximizing the enterprise value of the SMM Group and for ensuring soundmanagement practices. As such, it is an importantmanagement issue.
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.

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.
SMM has a Board of Directors and has also adopted
executive oﬃcer and Audit & Supervisory Board systems to ensure that decision-making, supervision andexecution of business management each functioneﬀectively 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
Business Operations

Internal Audit Department(Headquarters)

Management Decision-Making andBusiness Execution Structures and Systems
SMM delegates substantial authority to executive oﬃcers. Thisin turn has clariﬁed the authority and responsibilities of directors and executive oﬃcers, allowing the Board of Directors tochannel its energies toward fulﬁlling timely decision-making andsupervisory functions.
Directors and the Board of Directors
SMMʼs Articles of Incorporation provides for a Board of Directors of up to ten members. This number is considered appropriate to ensure agility together with lively discussion during Boardof Directorsʼ meetings.
The Board of Directors meets on a regular basis once amonth, with extraordinary meetings held as and when required,

Six CSR Subcommittees

Operating Department

CSR
Committee
Compliance WG

Management
Committee
Risk Management WG

Executive Oﬃcers

Social Responsibility
Internal Control
Enterprise Value
Committee
Enhancement Committee

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

Occupational Health & Safety
Communications

to ensure that decisions are made expeditiously. Any resolutions taken by, and any matters reported to the Board of
Directors are in turn reported at meetings of executive oﬃcers
to ensure that information is properly shared among oﬃcers.
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 wider point of view prior to their submission for resolution by the Board of Directors or sanction by thepresident. In this regard, the Management Committee plays animportant role in ensuring rational decision-making, increasing
the eﬃciency of the decision-making process and promoting
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 Companyʼs 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.
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 decisionmaking, business execution and accounting. SMMʼs Articles ofIncorporation provide for up to ﬁve Audit & Supervisory Board
Members. The Audit & Supervisory Board meets on a regularbasis once a month, with extraordinary meetings held as andwhen required in conjunction with meetings of the Board of
Directors.
Audit & Supervisory Board Members attend meetings of theBoard of Directors, Management Committee and all other meetings considered of importance. Audits are conducted on thebasis of reports received from directors, consideration of ﬁnancial reports and materials, and onsite visits to business oﬃces
and plants as well as subsidiaries. Audit & Supervisory Board
Members belonging to the Company present their opinions atimportant meetings including meetings of the Board of Directors based on the audits they have conducted as Audit & Supervisory Board Members (Standing) independently from the Company while outside Audit & Supervisory Board Members present their opinions based on their respective experiences andexpertise in specialist ﬁelds. Audit & Supervisory Board Members (Standing) shall report the details of onsite audits thathave 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.

Auditing System
Collaboration between the Internal Audit Department, Independent
Public Accountant and Audit & 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 ofinternal audits are delivered to executive oﬃcers and the headsof operational divisions.
KPMG AZSA & Co. is currently the Companyʼs 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 ofaudit 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 andAudit & 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 authorityof the Board of Directors, the basic remuneration (excluding
bonus payments) takes into consideration predetermined
criteria based on the Companyʼs performance as well as otherfactors including an evaluation of the performance of eachdivision and the status of business execution together with theperformance of each individual based on speciﬁc oﬃce assessment criteria. Bonuses (with the exception of outside directors)
are determined based on the same remuneration criteria
together with an assessment of each individualʼs performance.
Taking into consideration the independent status of outside
directors and the focus placed on outside directorsʼ oversightfunction, an assessment of individual performance is not
reﬂected in the payment of remuneration to outside directors.
Accordingly, the payment of remuneration to outside directors
is limited to basic remuneration and does not include any bonus
payment.
While the payment of remuneration to individual Audit &Supervisory Board Members is determined through deliberations 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 paymentof remuneration to Audit & Supervisory Board Members islimited to basic remuneration and does not include any bonus
payment.
SMM does not provide for such long-term incentive remuneration as stock options. Moreover, the Company abolished its
system of retirement and severance beneﬁts for directors andAudit & Supervisory Board Members in 2005.
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 as follows.
(¥ millions)Oﬃcer
Classiﬁcation

NumberTotal Remuneration by TypeTotalofOﬃcers Remuneration Basic Remuneration Bonus

Directors(excluding one outside director)

7

379

303

76

Audit & Supervisory
Board Members

2

63

63

―

3

36

36

―

(excluding two outside Audit &Supervisory Board Members)

Outside Directors andOutside Audit &Supervisory Board Members

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.

28

29

Corporate Social Responsibility
The Sumitomo Group has been developing its business for around four centuries throughcontinuous adherence to the Sumitomo Business Spirit.
Acknowledging the importance of the values and ethics our forerunners built into theSumitomo Business Spirit, we will make every effort to strengthen SMM Group businessand consolidate societyʼs trust in us.

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 ininvestor relations (IR) activities as a part of eﬀorts to provide
all stakeholders, particularly shareholders and investors, witha 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 Groupʼs business strategies andother important details to analysts and institutional investors
several times each year.
Complementing these activities, and in order to continuously upgrade and expand the Companyʼs IR activities,
management and the IR Department conduct individual
meetings with analysts and institutional investors in Japanand overseas as well as plant inspection tours. Looking
ahead, the Company will endeavor to upgrade and expand its
IR activities for the beneﬁt of individual investors.

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

Outside Director and Outside Audit & Supervisory Board Members
Tsutomu Ushijima
Outside Director
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 specialist knowledge and wealth of experience as a lawyer and a licensed tax accountant, he was
Appointment
appointed an outside director to provide advice to SMM on business matters, particularly from a compliance
perspective.
Independence
He is appointed as an independent director (an individual with no conﬂict of interest with general shareholders)
based on the regulations of the Tokyo Stock Exchange.
Attendance
During the term, the Board of Directors convened 22 times (12 regular meetings and 10 extraordinary sessions).
at Meetings
He attended 20 of these meetings (11 regular meetings and 9 extraordinary sessions).
Outside Audit &Hikoyuki Miwa
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.
Reason for
Based on his auditing experience accumulated over many years at audit ﬁrms as well as his extensive knowledge in
Appointment
corporate management, he was appointed 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 the regulations of the Tokyo Stock Exchange.
Attendance
During the term, he attended all 22 Board of Directors meetings (12 regular meetings and 10 extraordinary
at Meetingssessions) and all 15 meetings of the Audit & Supervisory Board.
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.
Reason for
Based on his wealth of ﬁnancial institution experience he was appointed an outside Audit & Supervisory Board
Appointment
Member to provide his knowledge on business matters, particularly from an international perspective.
Independence
He is appointed as an independent auditor (an individual with no conﬂict of interest with general shareholders)
based on the regulations of the Tokyo Stock Exchange.
Attendance
During the term, the Board of Directors convened 22 times (12 regular meetings and 10 extraordinary sessions).
at Meetings
He attended 20 of these meetings (12 regular meetings and 8 extraordinary sessions) and all 15 meetings of the
Audit & Supervisory Board.

30

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 technological innovationand continuous improvements in energy eﬃciency.
2. SMM shall promote sustainable co-existence withsociety by respecting the needs of local communities in which we operate around the world.
3. To continue sound business activities, SMM shallrespect human rights and shall try to be a company
in which diverse human resources take active 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.

SMMʼs Philosophy
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 constitute SMMʼs
CSR activity and their implementation will take us
closer toward our goal of “sustainable co-existencewith society and the global environment.”

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 meets internationalanti-global warming standards byusing advanced technologies

A company that generates resources
using innovative technology

A company in which
employees are proud to work
along with the company onsocial contribution activities
rooted in local areas

A company that accords
safety the highest priorityand provides comfortableworking environments

Eﬀective useof resources
Contribution
to society
and local
communities

Environmental
preservation
Reduced CO2 emissions(energy savings)
and conservationof biodiversity

CSR Vision
for 2020

Occupational
healthand safety

Respect forpeople andhuman rights

A company that respects humanrights and diversity, develops
employees with high human rights
awareness, and gives them equal
opportunity based on employee
motivation and ability
A company that respects the humanrights of those aﬀected by Groupbusiness activities
A company that avoids involvementwith entities violating human rights
in areas with undeveloped social
infrastructure and in conﬂict areas

Stakeholder
communication
A company that is open tocommunication with stakeholder
groups worldwide

31

Directors and Audit & Supervisory Board Members

Financial Section
34 Eleven-Year Financial
Summary

36 Managementʼs Discussion &Analysis of Financial
Position and Operating
Results

40 Consolidated Balance
Sheets42 Consolidated Statements ofIncome / Consolidated
Statements ofComprehensive Income

43 Consolidated Statements of
Changes in Net Assets

45 Consolidated Statements ofCash Flows

46 Notes to Consolidated
Financial Statements

79 Independent Auditorsʼ
Akira Nozaki
DirectorTakeshi Kubota
Director

Mikinobu Ogata
Director

32

Yoshiaki Nakazato
President,
Representative Director

Nobumasa Kemori
Chairman,
Representative Director

Norifumi Ushirone
Director

Naoyuki TsuchidaDirector

ReportTsutomu Ushijima
Outside 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

33

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

Millions of yen (except per share amounts and key ratios)

2014

Years ended March 31

2012＊2

2013

2011

2010

2009

2008

2007

2006

2005

2004

864,077¥ 725,827¥ 793,797¥ 1,132,372¥ 966,764¥ 625,579¥ 484,585¥ 402,131

Results for the year:
Net sales¥

830,546¥808,540¥

847,897¥

Gross profit

124,822

140,650

132,421

138,810

105,956

56,887

198,147

203,180

120,137

82,87853,714

Operating income

75,41895,78588,577

96,03866,265

10,534

155,394

162,632

82,75647,893

22,778Other income (expenses)

35,58826,670(615)

27,356

16,511

12,408

61,11042,985

10,218

6,024

8,416

22,942

216,504

205,617

92,97453,91731,194

Income before income taxes and minority interests

111,006

122,455

87,962

123,394

82,776

Net income

80,25886,64065,286

83,962

53,952

21,974

137,808

126,054

62,80037,017

19,882

73,956

46,70821,915

13,5137,112

Equity in earnings of affiliated companies

29,77017,10023,217

34,832

26,09031,536

Capital expenditures

66,44159,291

73,143

53,105

26,41447,72365,14551,56750,56836,48846,540Depreciation

32,426

27,57831,132

34,62534,74634,26830,50525,693

22,951

20,57817,824

Net interest expenses

3,530

(144)

663

257

(654)

(271)

(2,209)(2,606)(1,281)(893)(1,098)Net cash flows from operating activities

80,014

114,665

144,999

102,458

44,153

128,000

157,383

95,98570,77240,15032,324

Net cash flows from investing activities(126,937)(88,745)(135,932)(75,735)(75,443)(28,386)(126,413)(77,429)(102,384)(31,725)(17,448)

Net cash flows from financing activities
Free cash flows

81

21,54950,314

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

55,727(10,073)

28,723

6,097(9,293)(46,923)

25,9209,067

26,723(31,290)

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

14,876

1,572,367

1,351,153

1,146,759

1,052,353

981,458

880,001

1,091,716

929,208

772,562

573,925

517,930

640,345528,921394,899

–

–

–

–

–

283,897

253,071

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

1,019,053

844,547

726,039

684,103629,684

547,251

−

–

–

–

–

–

Long-term debt due after one year

243,130

212,323

157,119

135,128

132,311

141,716

169,394

93,800114,405

109,777

86,437

Interest-bearing debt

383,580

330,073

265,951

210,969

200,939

218,534

258,054

189,910

190,891

160,533

148,351

Working capital

314,198

338,866

312,542

267,072

229,259

206,123

266,250

103,791

72,22886,382

52,795

Amounts per share (yen):
Net income− Basic145.35155.58116.17149.38

96.26

38.87

238.13220.49109.96

64.77

34.76

− Diluted

129.71142.40106.84136.98

88.75

36.18

231.50213.67108.87––

1,653.83

1,393.02

1,173.97

1,121.19

1,043.50

913.92

1,017.96

859.82654.15497.57443.29

30.0

27.0

14.0

8.0

6.0

4.02

Shareholders' equity

37.0

34.0

28.0

32.0

20.0

13.0

5.49

6.94

5.94

8.26

5.80

2.23

13.64

14.81

9.33

6.78

ROE (%) *1

9.54

12.13

10.12

13.80

9.89

4.02

25.39

28.99

19.10

13.79

8.35

Equity ratio (%) *1

58.1

56.9

57.5

59.9

59.8

57.3

54.0

53.4

48.4

49.5

48.9

Cash dividends
Key ratios:
ROA (%)

Interest-bearing debt to total asset ratio (%)

24.4

24.4

23.2

20.0

20.5

24.8

23.6

20.4

24.7

28.0

28.6

Debt-to-equity ratio (times) *1

0.42

0.43

0.40

0.33

0.34

0.43

0.44

0.38

0.51

0.57

0.59

Current ratio (times)

2.40

2.60

2.67

2.30

2.19

2.17

2.04

1.39

1.33

1.61

1.38

*1 Shareholders’ equity are defined as following equation.
Shareholders’ 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.

34

35

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

increased equity earnings of aﬃliated companies and theMedium- to Long-Term Business Strategy and Financial Policies
The short-term performance of the SMM Groupʼs three core businesses̶Mineral Resources, Smelting & Reﬁning, andMaterials̶is signiﬁcantly aﬀected by ﬂuctuations in non-ferrous metals prices, demand for electronic and other relatedmaterials, 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 mediumto long-term 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 Groupʼs 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 of gearing as measured by the debt-to-equity (D/E) ratio.

Scope of Consolidation: For ﬁscal 2013, the year ended

income due to such factors as a depreciating yen and ex-

March 31, 2014, the SMM Group comprised the parent

panding sales of electrolytic nickel.

company (Sumitomo Metal Mining Co., Ltd.), 66 subsidiaries (eight subsidiaries more than in the previous ﬁscal year),and 16 equity-method aﬃliates (one more equity-method
aﬃliate) on a global basis.

Operating Income
Consolidated operating income for ﬁscal 2013 was favorably impacted by the depreciating yen, but the oﬀsetting
eﬀects of other factors, including declining prices for gold

Operating Results
Overview of Operations and Consolidated Operating

and nickel, resulted in a net decrease of ¥20,367 million(21.3%), to ¥75,418 million.

Results
During ﬁscal 2013, the non-ferrous metals industry contin-

Other Income / Income before Income Taxes andued to experience softening prices for nickel and copper.

Minority Interests

However, factors such as an easing of concerns regarding

In the category of other income (expenses), signiﬁcant al-

future economic conditions limited further price declines.

locations to reserves for environmental measures were re-While nickel prices subsequently rose toward the end of theterm on supply concerns caused by Indonesiaʼs imposition

corded; however, these were partially oﬀset by interest anddividend income, equity in earnings of aﬃliated companies,

of controls on ore exports, copper prices continued to be

and gains on foreign exchange due to depreciation of thesoft. Due to an outﬂow of investment funds in response toyen. As a result, income before taxes and minority interests

recovering US economic conditions, gold continued seeking

fell ¥11,449 million (9.3%), to ¥111,006 million.

further lows, but an upward price trend emerged toward
the end of ﬁscal 2013. With respect to Materials segmentrelated industries, demand for materials used in the manufacture of automotive batteries increased, while demand for

Net Income
After accounting for taxes and minority interests, net income decreased ¥6,382 million (7.4%) to ¥80,258 million. As

materials for advanced mobile devices, home appliances,a result, basic net income per share declined from ¥155.58

and other products were buoyed by a healthy sales environ-at the end of the previous term to ¥145.35.

Research and Development (R&D) Expenses

inﬂuence of the yenʼs depreciation; an expansion in prop-

Total ﬁscal 2013 R&D expenses amounted to ¥6,648 mil-erty, plant and equipment due to capital expenditures in thelion, an increase of ¥1,649 million (33.6%) compared with

Taganito Project; and long-term loans to the Sierra Gorda

the previous term.

Project.

In the Mineral Resources segment, we are carrying out R&D
relating to non-ferrous ore processing, including dressing

Liabilities

technology development to improve reﬁned ore quality andTotal liabilities amounted to ¥553,314 million as of the end

yield, as well as processing of eﬄuent from the Hishikariof ﬁscal 2013, an increase of ¥46,708 million compared

Mine and inactive mines in Japan.

with ¥506,606 million a year earlier. Of this total, current

In the Smelting & Reﬁning segment, the major R&D themes

liabilities rose ¥12,377 million to ¥223,763 million, attribut-

included the development of reﬁning technologies that willable to such factors as an increase in debt due within one

foster the ability to handle a wide range of raw materials

year. Meanwhile, long-term liabilities rose ¥34,331 million

and ore grades and improved cost competitiveness, as wellto ¥329,551 million. This largely reﬂected the increase inas the development of new metal-reﬁning processes. In ad-

long-term debt to fund continuing aggressive investment indition, the segment moved ahead with the development oflarge-scale projects.

recycling processes with respect to rare and other metals,
including nickel from used hybrid-vehicle secondary batter-

Net Assets

ies.

Net assets as of March 31, 2014 stood at ¥1,019,053 million,

In the Materials segment, R&D initiatives were mainly direct-up ¥174,506 million from ¥844,547 million at the end of theed toward functional and wiring materials related to second-previous ﬁscal year. Net income for the period was ¥80,258

ary batteries, solar cells, fuel cells, energy-eﬃcient lighting,million, due in part to substantial positive foreign currency

and other energy-eﬃcient products, which are currently

translation adjustments resulting from depreciation in thedrawing attention in the energy- and environment- related

value of the yen. In line with the increase in net assets, net

ﬁeld. In particular, we are working to enhance the cost com-

assets per share improved from ¥1,393.02 to ¥1,653.83 aspetitiveness, capacity, safety, and other functions of lithiumof March 31, 2014.

nickelate, a cathode material for lithium secondary batteries, to aggressively extend the use of this material into hy-

Major Financial Indicators

brid and electric vehicles, and PC power supplies.

Due to the aforementioned factors, the D/E ratio remained
substantially unchanged at 0.42, compared to 0.43 at the

Financial Positionend of the previous year. The equity ratio remained sound,

Assetsincreasing slightly from 56.9% to 58.1%.

As of March 31, 2014, total assets amounted to ¥1,572,367
million, up ¥221,214 million from the level of ¥1,351,153 mil-Cash Flowslion recorded at the end of the previous term.

Net cash provided by operating activities came to ¥80,014

Of this total, current assets fell ¥12,291 million to ¥537,961

million, down from ¥114,665 million at the end of the previ-

million, largely reﬂecting a decrease in marketable securi-

ous ﬁscal year, due to lower income before taxes and minor-

ties included in negotiable deposits. Total ﬁxed assets rose

ity interests, higher corporate taxes and other payables, and¥233,505 million to ¥1,034,406 million, mainly due to an in-

an increase in inventories.

crease in investment securities driven by such factors as

Net cash used in investing activities totaled ¥126,937 mil-ment.
Under these circumstances, and based on the 2012 3-Year

Operating Results by Business Segment

Shareholdersʼ Equity and Equity Ratio

Debt-to-Equity Ratio and Interest-Bearing Debt

Business Plan, SMM is promoting a new growth strategy

For details regarding results and the status of business■Shareholdersʼ Equity■Interest-Bearing Debt

based on its long-term vision as the underlying platform

progress by business segment, please refer to the Review

for bolstering the competitiveness of its three core busi-

of Operations section on pages 20 to 25.

nesses̶Mineral Resources, Smelting & Reﬁning, and Materials̶while channeling business resources into growth

Capital Expenditures

sectors by revamping its business structure.

Total capital expenditures in ﬁscal 2013 amounted to ¥66,441
million, up ¥7,150 million (12.1%) compared to the previous

36

Net Sales

term. By segment, capital expenditures were ¥19,387 mil-In ﬁscal 2013, consolidated net sales increased ¥22,006 mil-lion in the Mineral Resources segment; ¥34,656 million inlion (2.7%) over the previous term to ¥830,546 million. While

the Smelting & Reﬁning segment, principally for the Taganito

sales ﬁgures for copper declined, the year saw increased

Project; and ¥8,379 million in the Materials segment.

Equity Ratio(¥ billions)
900

（%）
80

450

0

40

2010

2011

2012

0
2013
2014
(As of March 31)

Debt-to-Equity Ratio(¥ billions)
400（Ratio）
0.50

200

0

0.25

2010

2011

2012

0.00
2013
2014
(As of March 31)

37

lion, compared with ¥88,745 million in ﬁscal 2012, due to

aimed at boosting competitiveness, both in materials pro-pational safety and health, environmental protection, pollu-

performance and ﬁnancial position.

higher facilities investment to expand nickel production andcurement and manufacturing.

tion prevention, industrial waste disposal and management

The SMM Group recognizes the importance and value ofof potentially toxic substances.

acquiring intellectual property rights and managing such

2 Deterioration in terms of non-ferrous metal ore

In accordance with these statutory and regulatory require-rights properly in accordance with related laws and regu-

purchasing contracts and supply disruptions

ments, operators may be charged with compensation forlations. However, it is not always possible to secure such

additional ﬁnancing for the Sierra Gorda Project, as well as
increased investment in negotiable securities.
Net cash provided by ﬁnancing activities amounted to ¥81
million, down from ¥21,549 million in the previous ﬁscal year.

Currently, the SMM Group procures the majority of copper

loss or damages, irrespective of the existence of negligencerights even if the necessary procedures are followed. As

While expenditures for share buybacks were lower relativeores, nickel matte and other raw materials for non-ferrous

or otherwise, or demands for the maintenance and manage-

such, our use of the fruits of our R&D activities could beto the previous term, such oﬀsetting factors as lower in-metal reﬁning operations based on long-term ore-purchas-ment of abandoned mines. Moreover, operators may incurthreatened by disputes with third parties or unlawful third-

come from long-term liabilities resulted in a net decrease.

ing contracts that are not backed by investment.

the burden of additional expenses due to requirements im-

party use of intellectual property.

Taking into account the aforementioned activities and after

Each year, the raw materials purchasing terms and condi-

posed under new environmental standards and regulations.

To reduce the impact of such risk, the SMM Group has es-

deducting the eﬀect of exchange rate change, cash and cash

tions of long-term ore-purchasing contracts are subject

At the same time, both the mining and non-ferrous metals

tablished an R&D structure aimed at rapid utilization of its

equivalents as of March 31, 2014 amounted to ¥202,583

to negotiation. In each case, there are instances in which

reﬁning industries incur the risks and associated responsi-

end products. We have also established a specialized de-million, a decrease of ¥37,108 million over the previous term.

required volumes cannot be purchased at an appropriate

bilities for environmental pollution as well as the disposal ofpartment to manage our intellectual property rights, andprice due to a variety of market factors. Furthermore, as

mining and industrial waste. Ongoing regulatory compliance

are working to reliably obtain and preserve such rights.

Risk Information

product prices are generally determined by such factors ascosts are substantial and subject to unexpected increases

The following section provides an overview of the risk fac-

supply and demand̶particularly factors relating speciﬁ -as the result of the sudden emergence of previously un-

6 Overseas investments

tors that could exert a signiﬁcant eﬀect on the businesscally to non-ferrous metals̶there are instances where theknown risks. The costs of ensuring regulatory compliance

The Group strives to develop its overseas business, both inperformance and ﬁnancial position of the SMM Group. Alltransfer of any deterioration in the purchasing terms andcould therefore exert a negative impact on the Groupʼs busi-

terms of the location of production bases as well as the saleforward-looking statements in the text refer to management

conditions of raw materials to product prices is diﬃcult.

ness performance and ﬁnancial position.

of its products. In the conduct of overseas business, how-decisions based on the best information available at the end

Supplies of ore can also be delayed or suspended due to

To mitigate such risks, the Group seeks to ensure that op-

ever, SMM is subject to a wide range of political and eco-of ﬁscal 2013.

unpredictable disruptive events beyond the control of theerations are in full compliance with environmental protec-

nomic risks that vary by country. These include, but are notGroup, such as extreme weather conditions, large-scaletion and other laws and regulations through the operation

limited to, political instability; changes in statutory and regu-

earthquakes, supplier operational accidents and industrialof environmental and risk management systems based onlatory requirements with respect to the environment, labor,

disputes. Such factors could impose various constraints onstrict standards. The Group also endeavors to manage op-taxes, currency management and controls as well as trade;

1. Sustained downturn in non-ferrous metals prices

Group production volumes, which as a result could exert aerations so that related compliance costs are kept within

limited protection under the law or inadequate enforceabil-

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

negative impact on the Groupʼs business performance andreasonable limits.

ity in connection with intellectual and other property rights;

metals are essentially determined by the London Metal Ex-

ﬁnancial position.

change (LME) and other international markets (hereinafter

To mitigate such risks, the Group continues to seek to devel-

5 Risks associated with market shifts, new productconﬁscation or nationalization of assets. The emergence ofreferred to as “LME and other market prices”). LME andop overseas mines and invest in high-grade overseas mines

development and intellectual property rights

various developments could prevent the Group from earn-other market prices are inﬂuenced by a number of factors,

to secure reliable within-Group supplies of ore.

1 Fluctuations in non-ferrous metals prices andexchange rates

including international supply and demand, political andIn those markets related to the Groupʼs Materials business,

ing a suitable return on overseas investments. Such risks

increasingly longer periods are required for the develop-

include the development of mineral resource projects byeconomic circumstances, speculative trading, and competi-

3 Uncertainty inherent in mining investments

ment of new products due largely to rapid changes in ap-

organizations funded by national or regional governmentstion from alternative materials. A sharp and sustained down-

As described above, the raw materials procurement policy

plied technologies, customer requirements and product life.

against the backdrop of high non-ferrous metals prices, orturn in non-ferrous metals prices could have a signiﬁcantof the SMM Group is to develop within-Group mining re-This is even as product development programs in these ar-the levying of higher taxes on such operations. Increased

negative impact on the Groupʼs business performance andsources to boost the proprietary ore ratio. Amounts of ex-

eas require the investment of increasingly large amounts ofenvironmental demands from various quarters constitute a

ﬁnancial position.

tractable ore and extraction costs can only be estimatedtime and resources.

further risk.

based on the results of exploratory surveys.

Expected returns on investment from related new productTo mitigate such risks, the SMM Group makes overseas in-

2. Appreciation of the yenWith respect to mining development, the development costs

development programs may not materialize due to obsoles-

vestment decisions based on careful consideration of all rel-Not only imported raw materials, including copper concen-of a mining project can rise due to a variety of factors, suchcence caused by technological progress, delays caused byevant country risks.

trates and nickel matte but also the domestic prices of non-as compliance with environmental or regulatory actions. Any

responding to customer requests, or the launch of competi-

ferrous metals, are determined under U.S. dollar-denom-

additional investment or increase in the burden of extrac-

tor products among other factors. Customer demand for

7 Disaster-related risks

inated LME and other market standards. Accordingly, thetion costs arising from the inherent uncertainty associatedproducts may also decline in the future. All these various

The SMM Group locates production operations based on

reﬁning margins earned by SMM from its Smelting & Reﬁn-with mining developments could have a negative impact on

factors could have a negative impact on the Groupʼs busi-

considerations such as customer relationships, raw material

ing business are eﬀectively denominated in U.S. dollars. In

the Groupʼs business performance and ﬁnancial position.

ness performance and ﬁnancial position.

procurement, linkage to other Group operations, and eﬀec-

addition, returns on investments in overseas mining devel-

To mitigate such risks, the SMM Group employs a selective

In addition, sales volumes of the Groupʼs mainstay Materi-tive use of management resources. Unexpected large-scale

opments, income earned from investments in the Materials

investment policy and undertakes strict assessments of theals business products are dependent upon customer pro-natural disasters such as earthquakes or typhoons that af-business, and revenues from exports of products in eachpotential proﬁtability of individual mining developments,

duction levels of such items as mobile handsets, PCs, andfect the regions where such facilities are located could re-of the aforementioned businesses are also denominated inbased on extensive experience in mining extraction andelectric household appliances. Accordingly, performance

sult in major ﬁnancial losses arising from such factors as

foreign currencies.

mine valuation accumulated over many years.

is subject to a variety of factors including cyclical demand

onsite damage and loss of production.

for the products manufactured by customers, advances in

To mitigate such risks, the Group insures such facilities

technological innovation, and general economic trends.

where this is possible at reasonable cost and has madeAs a result of such factors, the development of new prod-

plans containing suitable countermeasures to minimize any
secondary eﬀects due to such disasters.

A substantial appreciation of the yen against these currencies over a sustained period could exert a signiﬁcant negative impact on the Groupʼs business performance and ﬁnan-

38

ﬂuctuations in foreign currency exchange rates; and the

4 Environmental protection and regulatorycompliance risks

cial position.

SMM Group businesses, notably its mining and non-ferrous

ucts and sales of existing products in the Groupʼs Materials

To mitigate these external risks, the SMM Group continues

metal smelting and reﬁning operations, are subject to abusiness may not progress in accordance with plans. This in

to make progress in implementing a variety of measures

broad range of laws and regulations in such areas as occu-

turn could exert a negative impact on the Groupʼs business39Consolidated Balance Sheets
SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2014

239,691$ 1,969,119

2014

As of March 31, 2014 and 2013
Current assets:
Cash and cash equivalents (Notes 3 and 8)
Time deposits (Note 3)

202,583
187

¥

1,100

1,818

86,71588,530842,875

Unconsolidated subsidiaries and affiliated companies

3,652

3,597

35,498

Allowance for doubtful accounts

(295)

(252)

(2,867)

155,886

142,962

1,515,222

1,834

1,774

Other current assets
Total current assets

Thousands of
U.S. dollars(Note 1)

2013

2014

2014

As of March 31, 2014 and 2013
Bank loans (Notes 3 and 8)
Long-term debt due within one year (Note 8)¥

72,342¥60,731$

703,169

18,108

7,019

176,01134,01228,600330,599

Notes and accounts payable:

Trade

Deferred tax assets (Note 9)

Millions of yen

Current liabilities:¥

Notes and accounts receivable: (Note 3)Inventories (Note 6)

LIABILITIES AND NET ASSETS

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

4,398

6,612

42,749Other

20,27518,923

197,074

Accrued income taxes (Note 9)

9,531

20,27992,642

Accrued expenses

3,963

4,304

38,521

17,827

Advances received

943

909

9,166

Accrued restructuring charges

97

8

943

Accrued environmental measures

898

66

8,729

87,39972,850849,522537,961

550,252

5,229,014

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

442

426

4,296

58,75463,509571,091

223,763

211,386

2,174,990

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

Investment securities (Notes 3, 4 and 8):
Unconsolidated subsidiaries and affiliated companies
Other

331,139
181,099

259,581
143,807

3,218,692

Long-term debt (Notes 3 and 8)

293,130

262,323

2,849,242

1,760,294

Deferred tax liabilities (Note 9)22,301

16,346

216,767

−

5,701

―−

1,280

52

12,442−(6)−

Unconsolidated subsidiaries and affiliated companies

69,791

22,629678,373

Others9,107

12,932

88,521

14,0168,200

136,235

(209)

(210)

(2,031)

604,943446,933

5,880,084

Allowance for loss on investments
Long-term loans receivable

Other long-term receivables (Notes 3 and 8)
Allowance for doubtful accounts
Total investments and long-term receivables

Accrued retirement benefits (Note 10)
Accrued environmental measures
Accrued restructuring charges
Other accruals

−

37

―−

246

265

2,391

Net defined benefit liability (Note 10)

4,961

–

48,221

Asset retirement obligations (Note 16)

6,030

5,337

58,612Other long-term liabilities

1,603

5,159

15,581

329,551

295,220

3,203,256

906,318

Total long-term liabilities
Contingent liabilities (Note 13)

Property, plant and equipment (Note 8):

Net assets (Note 12):Land

28,75828,266

279,530

Shareholders’ equity:

Buildings and structures

236,087

186,906

2,294,780

Common stock

Machinery and equipment

524,957

381,917

5,102,615

Construction in progress

47,936

131,733

465,941

Accumulated depreciation
Net property, plant and equipment

837,738

728,822

8,142,866(421,965)(386,755)(4,101,527)

415,773

342,067

4,041,339

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

93,242

Capital surplus

86,062

86,062

836,528

Retained earnings

704,824

644,6426,850,933

Issued - 581,628,031 shares

Treasury stock, at cost
Total shareholders’ equity(31,978)(31,895)(310,828)

852,150

792,051

8,282,951

31,33524,645

304,578

Accumulated other comprehensive income:Deferred tax assets (Note 9)

2,593

1,520

25,204

Other assets

11,097

10,381

107,864¥ 1,572,367¥ 1,351,153$ 15,283,505

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

Net unrealized holding gains on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments(1,856)972(45,590)

286,412

120

–

1,166

61,021(22,801)

593,128

Minority interests

105,882

75,297

1,029,180

Total net assets

1,019,053

844,547

9,905,259¥ 1,572,367¥ 1,351,153$ 15,283,505

Remeasurements of defined benefit plans
Total accumulated other comprehensive income

Total liabilities and net assets

40

100
29,46641

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, 2014 and 2013
Net sales (Note 15)

2014¥ 830,546

Millions of yen

Thousands of
U.S. dollars(Note 1)2013
¥ 808,540

2014$ 8,072,959

Shareholders’ Equity

Costs and expenses:
Cost of sales

705,724

667,890

Selling, general and administrative expenses (Note 11)49,40444,865480,210755,128

712,755

7,339,891

75,41895,785733,068

Interest and dividend income

7,092

3,157

68,935Interest expense(3,562)(3,301)(34,623)

(3)

(908)

(29)

306

232

2,974

Loss on impairment of fixed assets (Note 7)(1,253)(198)(12,179)

Exchange gain

6,513

5,618

63,307

Provision for environmental measures(2,134)(44)(20,743)

Maintenance cost for ceased projects

(500)

(527)

(4,860)Operating income

6,859,681

Other income (expenses):

Write-down of investment securities (Note 4)
Gain on sale and disposal of property, plant and equipment

Casualty loss
Equity in earnings of affiliated companies
Loss from valuation of derivative instruments

(5)

(15)

(49)

29,77017,100289,366(3)(1,311)(29)

Loss (Gain) on change in equity

(101)

8,435

(982)

Other, net(532)(1,568)(5,171)35,58826,670345,917

111,006

122,455

1,078,985

Income before income taxes and minority interests
Income taxes (Note 9):
Current

24,57327,247

238,851

Deferred

(950)

1,658

(9,234)

Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

23,62328,905

229,617

87,38393,550849,368(7,125)(6,910)¥ 80,258¥ 86,640$

Retainedearnings

TreasurystockMillions of yen(thousands)

581,628

Net income

Total
shareholders’equity¥ 93,242¥ 86,063¥ 572,576¥ (21,845)¥ 730,036––

86,640–86,640Foreign currency translation adjustments

–

–

–

–

–

Adjustments for unrealized gains on securities

–

–

–

–

–

Change of scope of consolidation

–

–

–

–

–

Acquisition of treasury stock

–

–

–

(10,053)(10,053)

Sale of treasury stock

–

(1)

–

3

2

Deferred gains on hedges

–

–

–

–

–

–

–

–

–

–

Increase resulting from change in accounting policies
of affiliated companies
Remeasurements of defined benefit plans

–

–

–

–

–

Minority interests

–

–

–

–

–

Cash dividends paid––

(14,574)–(14,574)

Balance at April 1, 2013

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

Net income

581,628––

80,258–80,258Foreign currency translation adjustments

–

–

–

–

–

Adjustments for unrealized gains on securities

–

–

–

–

–

Change of scope of consolidation

–

–

(848)

–

(848)

Acquisition of treasury stock

–

–

–

(89)

(89)

Sale of treasury stock

–

–

–

6

6

Deferred gains on hedges

–

–

–

–

–

–

–

1,204

–

1,204

–

–

–

–

–

U.S. dollars(Note 1)

2014

2013

2014

¥ 145.35
129.7137.00¥ 155.58
142.4034.00

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

Balance at April 1, 2012

Capitalsurplus(69,255)

Yen$

For the years ended March 31, 2014 and 2013

Commonstock

780,113

Amounts per share of common stock:− Basic

Number ofshares issued

1.41
1.26
0.36

Increase resulting from change in accounting policies
of affiliated companies (Note 2)
Remeasurements of defined benefit plans
Minority interests

–

–

–

–

–

Cash dividends paid––

(20,432)–(20,432)¥ 93,242¥ 86,062¥ 704,824¥ (31,978)¥ 852,150

Balance at March 31, 2014

581,628

Shareholders’ Equity

Consolidated Statements of Comprehensive Income

Commonstock

For the year ended March 31, 2014

SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2014 and 2013
Income before minority interests

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 87,383¥ 93,550

6,666

13,631$

849,368

Other comprehensive income
64,794

Balance at April 1, 2013
Net income

Retainedearnings

Treasury
stock

Total
shareholders’equityThousands of U.S. dollars (Note 1)$ 906,318$ 836,528$ 6,265,960––

780,113$ (310,021) $ 7,698,785–

780,113

Foreign currency translation adjustments

–

–

–

–

–

Adjustments for unrealized gains on securities

–

–

–

–

–

Change of scope of consolidation––(8,243)–(8,243)Net unrealized holding gains on securities
Deferred gains on hedges

1,909

3,012

18,556

Acquisition of treasury stock

–

–

–

(865)

(865)

Foreign currency translation adjustments

45,784

18,153445,023

Sale of treasury stock

–

–

–

58

58

Deferred gains on hedges

–

–

–

–

–

–

–

11,703–

11,703

–

–

–

–

–

Share of other comprehensive income of
49,62817,121

482,387

Total other comprehensive income

103,987

51,9171,010,760

Comprehensive income (Note 14)

191,370

145,467

1,860,128

affiliated companies accounted for using equity method

Owners of the parent

163,960

134,155

1,593,701

Minority interests

27,41011,312

266,427

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

Increase resulting from change in accounting policies
of affiliated companies (Note 2)
Remeasurements of defined benefit plans

Comprehensive income attribute to:42

CapitalsurplusMinority interests

–

–

–

–

–

Cash dividends paid––

(198,600)–(198,600)$ 906,318$ 836,528$ 6,850,933

Balance at March 31, 2014
The accompanying notes are an integral part of these financial statements.

$ (310,828) $ 8,282,951

43

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, 2014, 2013
Balance at April 1, 2012

Millions of yen¥ 10,986¥ (4,854)¥ (76,448)

Net income––

Foreign currency translation adjustments–

Adjustments for unrealized gains on securities
Change of scope of consolidation
Acquisition of treasury stock

Total net
assets–¥ (70,316)¥ 66,319¥ 726,039

–

–

–

–

86,640–30,858–30,858–30,85813,659–––13,659–13,659

–

–

–

–

–

–

–

–

–

¥

–

–

–

–

(10,053)

Sale of treasury stock

–

–

–

–

–

–

2

Deferred gains on hedges

–

2,998

–

–

2,998

–

2,998

Increase resulting from change inThousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 111,006¥ 122,455$ 1,078,985

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation

32,426

27,578315,183

Loss on impairment of fixed assets

1,253

198

12,179Loss (Gain) on sale and disposal of property, plant and equipment

(306)

(232)

(2,974)

Write-down of investment securities

3

908

29

Loss (Gain) from valuation of derivative instruments

3

1,311

29

(7,092)(3,157)(68,935)

Interest and dividend income
Interest expense
Equity in earnings of affiliated companies

3,562

3,301

34,623(29,770)(17,100)(289,366)

accounting policies of affiliated companies

–

–

–

–

–

–

–

Casualty loss

5

15

49

Remeasurements of defined benefit plans

–

–

–

–

–

–

–

Decrease (Increase) in trade receivables

2,588

6,372

25,156

Minority interests

–

–

–

–

–

8,978

8,978

Decrease (Increase) in inventories(8,216)

9,952(79,860)624(13,046)

6,065(7,450)(19,754)(72,415)

Cash dividends paid

–

–

–

Balance at April 1, 2013

¥ 24,645¥ (1,856)¥ (45,590)

Net income––

Foreign currency translation adjustments–

Adjustments for unrealized gains on securities

Increase (Decrease) in trade payables

–

–

–

(14,574)–¥ (22,801)¥ 75,297¥ 844,547

–

–

–

–

80,25898,636

118,801

958,748

Interest and dividend received

20,784

10,472

202,022–75,056–75,056–75,056

Interest paid

(3,518)(3,421)(34,195)

6,690

–

–

–

6,690

–

6,690

Payments for maintenance costs for ceased projects

(500)

(527)

(4,860)Change of scope of consolidation

–

–

–

–

–

–

(848)

Payments for recovery costs

(5)

(15)

(49)

Acquisition of treasury stock

–

–

–

–

–

–

(89)

(35,383)(10,645)(343,925)

Sale of treasury stock

–

–

–

–

–

–

6

80,014

114,665

777,741

Deferred gains on hedges

–

1,956

–

–

1,956

–

1,956

(622,735)¥

Increase resulting from change inaccounting policies of affiliated companies (Note 2)
Remeasurements of defined benefit plans

–

–

–

–

–

301

1,505

–

–

–

120

120

–

120

Minority interests

–

–

–

–

–

30,28430,284

Cash dividends paid

–

–

–

–

–

–

(20,432)¥ 31,335¥ 100¥ 29,466¥ 120¥ 61,021

Balance at March 31, 2014

¥ 105,882 ¥ 1,019,053

Net unrealized
holding gains
on securities

Deferred gains
on hedges

Foreign
Remeasurements ofcurrencytranslation defined benefit
plans
adjustments

For the year ended March 31, 2014
Balance at April 1, 2013

Total accumulated othercomprehensive
incomeMinority
interests$ (18,040) $ (443,138)$– $ (221,627) $Total net
assets731,892 $ 8,209,050

Net income

–

–

–

–

–

–

780,113

Foreign currency translation adjustments––

729,550–

729,550–

729,550

65,027–––65,027–65,027

Change of scope of consolidation

–

–

–

–

–

–

(8,243)Acquisition of treasury stock

–

–

–

–

–

–

(865)

Sale of treasury stock

–

–

–

–

–

–

58

Deferred gains on hedges–

19,012––

19,012–

19,012

–

–

–

–

–

2,926

14,629Adjustments for unrealized gains on securities

Increase resulting from change inaccounting policies of affiliated companies (Note 2)
Remeasurements of defined benefit plans

–

–

–

1,166

1,166

–

1,166

Minority interests

–

–

–

–

–

294,362

294,362

Cash dividends paid

–

–

–

–

–

–

(198,600)

972 $ 286,412$ 1,166

Balance at March 31, 2014

$ 304,578$

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

Sub -total

Payments for/Refund of income taxes
Net cash provided by operating activities

Cash flows from investing activities:(64,067)(52,649)

Payments for acquisition of intangible assets

(883)

(286)

(8,583)

Proceeds from sale of property, plant and equipment

1,788

1,005

17,379Payments for acquisition of property, plant and equipment

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

86

8

836

(18,098)(10,562)(175,914)

Payments for purchases of securities of subsidiaries and

(285)

(139)

(2,770)

Payments for loans lended(46,741)(25,672)(454,325)

Collection of loans repaid

570

276

5,540

Other

693

(726)

6,736

(126,937)(88,745)(1,233,837)

affiliated companies

Cash flows from financing activities:

Thousands of U.S. dollars (Note 1)$ 239,551

OthersNet cash used in investing activities

Accumulated other comprehensive income

44

For the years ended March 31, 2014 and 2013

Millions of yen

Proceeds from long-term debt

27,596151,205

268,235

Repayments of long-term debt

(7,410)(102,527)(72,026)

Net increase (decrease) in bank loans

2,624

(187)

25,505Contribution from minority in consolidated subsidiaries

40

25

389

Increase in treasury stocks(83)(10,051)(807)

Cash dividends paid

(20,432)(14,574)(198,600)

Cash dividends paid to minority in consolidated subsidiaries(2,254)(2,342)(21,909)81

21,549

787

9,715

6,514

94,430Net cash provided by financing activities
Effect of changes in exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(37,127)

53,983(360,879)

Cash and cash equivalents at beginning of year

239,691

185,7082,329,812

Increase in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at end of year

19

–

185

¥ 202,583¥ 239,691$ 1,969,118

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

$ 593,128 $ 1,029,180 $ 9,905,259

45

Notes to Consolidated Financial Statements
SUMITOMO METAL MINING CO., LTD. AND CONSOLIDATED SUBSIDIARIES

1 Basis of presenting consolidated financial statements

Investments in the remaining unconsolidated subsidiaries and(marketable securities) are stated at the fair value. Unrealized

Property, plant and equipment — Property, plant and

The accompanying consolidated financial statements haveaffiliated companies are carried at cost because of theirgains and losses on these securities are reported, net of

equipment are stated at cost.

been prepared in accordance with the provisions set forth inimmaterial effect on the consolidated financial statements.

applicable income taxes, as a separate component of net

Depreciation of property, plant and equipment is computed

assets. The cost of securities sold is determined by the moving-by the straight-line method, based on the estimated useful

Cerro Verde S.A.A., which are affiliate companies of the Company,

average method. Other available-for-sale securities with nolives of respective assets. The depreciation period generally

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

have changed certain accounting policies for the year ended

available fair values (non-marketable securities) are stated at

ranges from 2 years to 60 years for buildings and structures

respects as to the application and disclosure requirements ofDecember 31, 2013. The Sumitomo Metal Mining Group (themoving-average method. Securities issued by unconsolidated

and 2 years to 22 years for machinery and equipment.

International Financial Reporting Standards (“IFRSs”).

“Group”) has presented the accumlated effects on the retained

subsidiaries and affiliated companies are carried at cost.

the Japanese Financial Instruments and Exchange Act, and in

Compania Contractual Minera Candelaria and Sociedad Minera

conformity with accounting principles generally accepted in

The accounts of the Company’s overseas subsidiaries andAccrued restructuring charges — Accrued restructuring

earnings and minority interests in the consolidated financial

affiliated companies are based on their accounting records

statements as at April 1, 2013, which is the beginning of the

Derivatives and hedge accounting — Derivative instruments arecharges are provided by the Company and its consolidated

maintained in conformity with generally accepted accounting

earliest period in which retrospective application is practicable, as

stated at fair value. Changes in the fair values are recognized as

subsidiaries to cover the costs of business reconstruction.

principles prevailing in the respective countries of domicile and“increase resulting from change in accounting policies of affiliatedgains and losses unless derivative transactions are used for hedging

make necessary amendments for consolidated financial statements

companies” in the consolidated statements of changes in net

purposes.

required by Practical Issues Task Force No.18 and No.24 issued byassets for the year ended March 31, 2014.

ASBJ. The accompanying consolidated financial statements have

In the elimination of investments in subsidiaries, the assets

Accrued environmental measures — Accrued environmental

If derivative transactions are used as hedges and meetmeasures is estimated and recorded to provide for futurecertain hedging criteria, the Company and its consolidated

potential costs, such as costs related to the disposal ofbeen restructured and translated into English with some expanded

and liabilities of the subsidiaries, including the portion

subsidiaries defer recognition of gains or losses resulting frompolychlorinated biphenyl (PCB) and to environmental

descriptions from the consolidated financial statements of

attributable to minority shareholders, are recorded based onchanges in fair value of derivative transactions until themeasures for inactive mines.

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

the fair value at the time the Company acquired control of therelated losses or gains on the hedged items are recognized.

accordance with Japanese GAAP and filed with the appropriate

respective subsidiaries.

Local Finance Bureau of the Ministry of Finance as required by the

Goodwill (consolidation difference between the investment

If interest rate swap contracts are used as hedges and meet

Retirement benefits — The estimated amounts of all retirementcertain hedging criteria, the net amount to be paid or received under

benefits to be paid at the future retirement dates are allocatedJapanese Financial Instruments and Exchange Act. Somecost and the underlying equity in its net assets at the date of

the interest rate swap contract is added to or deducted from theequally to each service year using the estimated number of total

supplementary information included in the statutory Japaneseacquisition) is amortized over five years on a straight-line basis.

interest on the assets or liabilities for which the swap contract wasservice years.

language consolidated financial statements, but not required

With respect to subsidiaries in the United States, goodwill is

executed.

for fair presentation, is not presented in the accompanying

amortized over 20 years on a straight-line basis.

Actuarial gains and losses are recognized in expenses using the

The Company evaluates hedge effectiveness monthly bystraight-line method over the average of the estimated remaining

comparing the cumulative changes in cash flows from or theservice years of 10 years commencing from the following period.

Cash and cash equivalents and cash flow statements —changes in fair value of hedged items and the corresponding

Prior service costs are recognized in expenses using thedollars are included solely for the convenience of readers

Cash on hand, readily available bank deposits, negotiablechanges in the hedging derivative instruments.

straight-line method over the average of the estimated remaining

outside Japan, using the prevailing exchange rate at Marchcertificates of deposits and short-term highly liquid investments

31, 2014, which was ¥102.88 to US$1.00. The convenience

with maturities not exceeding three months at the time of

Foreign currency translation — Receivables and payablestranslations should not be construed as representations thatpurchase are considered to be cash and cash equivalents.

denominated in foreign currencies are translated into

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

service years of 10 years.
Some domestic consolidated subsidiaries use the simplified
method for the calculation of projected benefit obligations.

Japanese yen at the fiscal year-end rates.

the Japanese yen amounts have been, could have been, orResearch and development — Research and development

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

Allowance for doubtful accounts — The allowance forother rate of exchange.

doubtful accounts is provided at an amount determinedtranslated into Japanese yen at the fiscal year-end rates

based on the historical experience of bad debt with respect

except for account components of net assets, which are

2 Summary of significant accounting policies

to ordinary accounts, plus an estimate of uncollectible

translated at historical rates. Income statements of

Accounting for certain lease transactions — Finance leases,

Consolidation — The consolidated financial statements

amount determined by reference to specific doubtful

consolidated overseas subsidiaries are translated at average

except for certain immaterial leases, are capitalized andinclude the accounts of the Company and its significant

accounts from customers who are experiencing financial

rates except for transactions with the Company, which are

depreciated over the lease term.

subsidiaries (66 subsidiaries in 2014, 58 in 2013). All significant

difficulties.

translated at the rates used by the Company.

Balance sheets of consolidated overseas subsidiaries are

expense is charged to income as incurred.

Income taxes — Deferred tax assets and liabilities areinter-company balances and transactions have been
eliminated. Investments in affiliated companies of which theInvestment securities — Securities are classified into two

Inventories — Inventories are mainly stated at the lower of cost

determined based on the differences between financial

Company has the ability to exercise significant influence over

categories based on the intent of holding: available-for-sale

determined by the first-in first-out (FIFO) method or net selling

reporting and the tax bases of assets and liabilities, andfinancial and operating policies, are accounted for by the

securities; and securities issued by unconsolidated subsidiaries

value of inventories regarded as the decreased profitability ofmeasured using the statutory tax rates which will be in effectequity method (16 affiliated companies in 2014, 15 in 2013).

and affiliated companies.

assets, whose write-downs are included in cost of sales.

when the differences are expected to be realized.

Available-for-sale securities with available fair values

46

47

Sales — Sales of merchandise and finished products are

benefit obligations and current service costs will become

Temporary surplus funds are utilized only for highly safe

to provide hedges for the risks of fluctuations in the foreign

recognized when the products are shipped to customers.

effective from the beginning of annual periods ending on or after

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

currency exchange rates of trade receivables and trade

March 31, 2015.

of principal.

obligations; the prices of non-ferrous metals applicable toChange in accounting policies — Effective from the year ended(3) Effect of application of standard

Derivative transactions are only used to avoid the risks

non-ferrous metal trade receivables and trade obligations;

March 31, 2014, the Company and its consolidated domestic

As a result of the change in accounting policies, retained

attributable to fluctuations in the prices of non-ferrous

and interest rates applicable to loans and bonds payable,

subsidiaries have applied the Accounting Standard for Retirement

earnings are expected to be ¥2,098 million (US$20,393

metals as well as foreign currency exchange and interest

respectively. For hedging instruments and hedged items,

Benefits (ASBJ Statement No. 26, May 17, 2012 (hereinafter,

thousand) less at the beginning of the next year. The effect ofrates. The Group does not engage in derivative translations

hedging policy, the method of assessing the effectiveness“Statement No. 26”)) and the Guidance on Accounting Standard forthe application on income or loss for the next year is immaterial.

for speculative purposes.

of hedges and other details in connection with hedge
accounting, refer to the “Derivatives and hedge

Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012
(hereinafter, “Guidance No. 25”)) with the exception of Article 35

Amount per share of common stock — Basic net income perof Statement No. 26 and Article 67 of Guidance No. 25 and actuarial

share is computed based on the weighted-average number

Notes and accounts receivable, which are tradegains and losses and past service costs that are yet to beof shares of common stock issued during each year.

receivables, are exposed to the credit risk of customers. In(2) Details of and risks associated with financial instruments

accounting” described in the Note 2 Summary of significant
accounting policies.

(3) Risk management systems relating to financial instruments

Diluted net income per share assumes that outstanding

addition, foreign currency-denominated trade receivables,

retirement benefit obligations and plan assets has been recognized

convertible bonds were converted into common stock at thewhich are generated by global business operations, are(i) Management of credit risk (risk relating to

as net defined benefit liability.

beginning of the period at the current conversion price.

also exposed to fluctuations in foreign currency exchange

nonperformance of a contract obligation by arates. Turning to the metals business, trade receivables arecounterparty, etc.)

recognized have been recognized and the difference between

In accordance with Article 37 of Statement No.26, the effect of
the change in accounting policies arising from initial application has

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

also exposed to the risk of movements in the prices ofWith respect to trade receivables, each operating

non-ferrous metals. Investment securities, which largely

department and division within the Group is guided by its own

Change in presentation — “Provision for environmental measure”

represent shares of companies with whom the Groupset of management rules and regulations. Sales and marketingthat was included in “Other,net” in other income (expenses) of the

trades or has formed an equity alliance, are exposed to thedepartments and divisions regularly monitor the status of

the amount of ¥4,961 million (US$48,221 thousand) has been

consolidated statements of income for the year ended March 31,

risk of changes in their market prices.

customers, managing due dates and balances on an individual

recognized and accumulated other comprehensive income has

2013 has become significant in its amounts and is therefore

increased by ¥120 million (US$1,166 thousand) at the end of theseparately presented for the year ended March 31, 2014. In order toobligations, generally have maturity dates of one year or

early detection and the mitigation of concerns regarding

current year.

reflect this change in presentation, the amounts of the accountless. In similar fashion to trade receivables, trade obligations

collection due to deterioration in financial standing or otherhave been reclassified in the consolidated statements of income forin the metals business are subject to the risk of movements

factors. With respect to the use of derivative transactions, steps

the year ended March 31, 2013.

in the prices of non-ferrous metals. A certain portion of

are taken to engage in transactions with highly rated financial

trade obligations are related to the import of raw andinstitutions only. These steps are taken with the aim of3 Notes to financial instruments

other materials and as such are denominated in foreign

mitigating counterparty risk.

1. Status of financial instruments

currencies. On this basis, they too are open to the risk of(1) Policies on the handling of financial instruments

fluctuations in the foreign currency exchange rates. Withinvalue of financial assets on the balance sheet which are

been recognized in remeasurements of defined benefit plans inaccumulated other comprehensive income.
As a result of the above application, net defined benefit liability in

Accounting standards issued but not yet effective —Accounting Standard for Retirement Benefits(ASBJ Statement No. 26, May 17, 2012)
Guidance on Accounting Standard for Retirement Benefits(ASBJ Guidance No. 25, May 17, 2012)

Notes and accounts payable, which are tradecustomer basis. In this manner, every effort is made to ensure

The maximum amount of the credit risk is shown in the

The Group procures the funds necessary for its capitalloans and bonds payable, bank loans payable primarily

subject to credit risk.

Under the amended rule, actuarial gains and losses andexpenditure, investment and loan plans mainly throughrepresent funding applicable to operating transactions(ii) Management of market risks (risks associated withpast service costs that are yet to be recognized in profit orbank loans and the issuance of bonds. Short-term operating

while long-term debt (with a maximum maturity up to

fluctuations in the price of non-ferrous metals, foreign

loss would be recognized within the net asset section, after

funds are funded through bank loans as required. In the event ofMarch 21, 2025) and bonds mainly concern funding

currency exchange as well as interest rates, etc.)

adjusting for tax effects, and the deficit or surplus would bea need for new funds, the Group, in principle, looks to therelating to capital expenditures. A certain portion of loans

recognized as a liability or asset without any adjustments.

issuance of short-term bonds (commercial paper). This isand bonds payable is provided on a floating rate ofcommodity option transaction agreements, which seek to

For determining the method of attributing expected benefits

supplemented by bank loans and the use of liquidation schemesinterest basis. Accordingly, this portion is exposed to the risk

provide hedges for the risks of fluctuations in the prices ofto periods, the amended standard now allows a choice between

applicable to notes and accounts receivable. The Group takesof fluctuation in interest rates.

imported raw materials with respect to non-ferrous metals

the benefit formula method and the straight-line method.

great care to monitor the status of its funding needs and

The method for determining the discount rate has also been

financial position. This is to ensure that the Group does notaforementioned risks include forward foreign currency

copper concentrate on international commodities markets.

amended.

overly rely on specific procurement methods and financial

exchange rate contracts; forward and option transaction

At the same time, the Group utilizes forward foreign

instruments. Accordingly, steps are taken to ensure a balanced

agreements; interest rate swap transaction agreements;

currency exchange rate contracts in an effort to offset thefunding portfolio from both the short and long term as well as

and interest rate cap transaction agreements, which seekrisks of movements in foreign currency exchange rates in(1) Summary(2) Effective dates
Amendments relating to the determination of retirement

Derivative transactions employed in an effort to offset the

The Group employs commodity forward transaction andas well as the sales prices of commodity metals anddirect and indirect financing perspectives.

48

49

connection with trade receivables and obligations(4) Supplementary explanation for fair values, etc. of financial

denominated in foreign currencies, interest rate swap

instruments

transaction agreements, and interest rate cap transaction

Fair values of financial instruments are determined byagreements aimed at hedging the risks of fluctuations ininterest rate.
With respect to investment securities, the Group regularlymarket prices. If no market price is available, the fair value
is based on the value that is calculated in a reasonable
manner. The determination of such values contains variable

Millions of yen

2014
Cash and cash equivalents

Thousands of U.S. dollars

Book values ofConsolidated
Balance Sheets

Fair Values

DifferenceBook values ofConsolidated
Balance Sheets

Fair Values¥ 202,583¥ 202,583¥−$ 1,969,119$ 1,969,119

187

187

−

1,818

1,818

Time deposits

Difference$−−

factors and as such the adoption of wide ranging andNotes and accounts
receivable

90,36790,367−878,373

878,373−(counterparties), and reviews its holdings on a continuous

differing assumptions may cause values to change. In

Investment securities

240,274

298,844

58,5702,335,478

2,904,782

569,304

basis taking into consideration its relationships withaddition, with respect to contract and other amounts

monitors fair values as well as the financial status of issuerscounterparties.
As for derivative transactions, in accordance with
derivative transaction management rules and regulations
that outline the purpose and objectives of derivative

applicable to derivative transactions outlined as follows in“2. Fair values, etc. of financial instruments” such amounts

Total Assets

80,957

2,059

766,893786,907

20,014¥ 672,938¥ 60,629$ 5,951,681$ 6,540,999$ 589,318

themselves do not indicate the size of market risks

Notes and accounts
payable38,41038,410−373,348

373,348−

associated with derivative transactions.

Bank loans

90,45090,450−879,180

879,180−

Long-term debt due after
one year

293,130

294,419

1,289

2,849,242

2,861,771

12,529Total Liabilities

421,990423,279

1,289

4,101,770

4,114,299

12,529525$ (8,058)

transactions while providing authority and setting limits andscope, individual departments and divisions are responsible

78,898¥ 612,309

Long-term loans receivable

2. Fair values, etc. of financial instruments

for formulating operating rules with respect to theAmounts on the consolidated balance sheets, fair values

implementation of derivative transactions, executing andand the differences between the two as of March 31, 2014

booking transactions and reconciling balances withand 2013 are shown as follows. Certain financial instruments

counterparties on a regular basis. Consolidated subsidiaries

were excluded from the following table as the fairalso adhere to the Company’s derivative transaction

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

Derivative transactions

¥

883

¥

54

¥

(829)

$

8,583

$

Millions of yen

2013

Book values ofConsolidated
Balance Sheets

Fair Values

Difference¥ 239,691¥ 239,691

¥

1,100

1,100

management rules and regulations while working to build

Cash and cash equivalents–

the aforementioned management structure under which

Time deposits

derivative transactions are managed.

Notes and accounts
receivable

92,127

92,127–(iii) Management of liquidity risks associated with theInvestment securities

179,901

337,589

157,688

procurement of funds (the risk of being unable to makeLong-term loans receivablepayments on due dates)

Total Assets–

35,561

37,253

1,692¥ 548,380¥ 707,760¥ 159,380

The Group manages liquidity risk by preparing andupdating a cash management plan six months in advance

Notes and accounts
payable35,21235,212–

based on reports from each department and division.

Bank loans

67,75067,750–Certain domestic consolidated subsidiaries have adopted

Long-term debt due after
one year262,323

263,916

1,593

Total Liabilities

365,285

366,878

1,593

a cash management system and are efficiently
maintaining appropriate levels of liquidity and cash on hand.

Derivative transactions¥(2,581)*¥(3,914)*¥(1,333)* 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 asterisk.

50

51

*3
The aggregate maturities subsequent to March 31, 2014 and 2013 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

2014

Due within
1 yearCash and cash equivalents¥ 202,583

Time deposits$ 1,969,119
1,818

−

$

−

$

−

−

$

−
−

−

878,373

−

−

−

1,719

−

282,747

467,438

16,709¥ 293,137¥ 29,089¥ 48,090¥ 1,719$ 2,849,310$ 282,747$ 467,438$ 16,709

2013

Due within
1 yearDue after
1 year andwithin 5 years

Due after
5 years andwithin 10 years

The discounted cash flow method was used to estimate the fair

Cash and cash equivalents¥ 239,691

values, based on marginal borrowing rates as discount rate.

Time deposits

1,100

–

–

Notes and accounts receivable

92,127––––25,006

8,851

1,704

¥ 332,918¥ 25,006¥ 8,851¥ 1,704

3. Bonds

Millions of yen

The fair values are based on market prices.
4. Long-term debt

market prices of securities exchanges on which shares are

For details regarding securities on an individual holding−−

Due over10 years−

Total

listed.

¥−Due after
5 years andwithin 10 years

48,090term settlement of these instruments.

The fair values of investment securities are based on the−Due within
1 year−high liquidity.

4. Investment securities¥

Due over10 years

29,089Long-term loans receivablematurities of these instruments.

−
−

187

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

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

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

Due after
5 years andwithin 10 years

90,367

Notes and accounts receivable

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¥––

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, 2014 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, 2014 and 2013:

The fair values of fixed-rate long-term loans receivable are basedon a method of calculation whereby the total principal and inter-

Available-for-sale securities

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

ing the market rate.
*2

Millions of yen

2014

The financial instruments excluded from the above table as of March 31, 2014 and 2013 are as follows:

Unlisted equity securities

Millions of yen

Thousands of U.S. dollars

2014

2013

2014

Book values ofConsolidated Balance
SheetsBook values ofConsolidated Balance
SheetsBook values ofConsolidated Balance
Sheets¥ 263,225¥ 216,322$ 2,558,563

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

Acquisition cost

Equity securities¥ 71,260¥

2013

Book value

Difference

Acquisition cost

Book value

Difference

118,581¥ 47,321¥ 52,658¥ 90,727¥ 38,069

Thousands of U.S. dollars

2014
Equity securities

Acquisition cost

Book value

Difference$ 692,652$ 1,152,615$ 459,963

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

2014
Acquisition cost

Equity securities¥ 11,791¥

2013

Book value

Difference

Acquisition cost

Book value

Difference

9,269¥ (2,522)¥ 10,901¥ 7,756¥ (3,145)

Thousands of U.S. dollars

2014
Acquisition cost

Equity securities52$ 114,609$

Book value

Difference

90,095$ (24,514)53

(2) The following table summarizes book values of the securities with no available fair values as of March 31, 2014 and 2013:

The following tables summarize the market value information as of March 31, 2014 and 2013 of derivative transactions for which hedge
accounting has not been applied:Available-for-sale securities
Millions of yen

Unlisted equity securities(3) There was no sale of available-for-sale securities during the year
ended March 31, 2014.
Total sales of available-for-sale securities sold during theMillions of yen

Thousands of U.S. dollars

2014

2013

2014

Contracted amount¥ 53,033¥ 45,132$ 515,484Over
1 yearand interest rates. Credit risk is the potential loss the Company
and its consolidated subsidiaries could incur if counterparties
default on their obligations. Derivative transactions are

2014

Total

Buy position−U.S. dollars
Interest:

related gains amounted to ¥154 million.

subsidiaries or London Metal Exchange (LME) brokers guaranteed

Interest rate cap contracts:

recognized during the year ended March 31, 2014.

Buy position

subsidiaries might reduce the risk of default on an obligation.

¥

47

¥

47

¥ 11,380¥–¥ (100)¥ (100)

¥

47

¥

47

¥ 11,380¥–¥ (100)¥ (100)¥ 1,350

¥−

¥

367

¥ (983)¥ 1,350

¥–

¥

800

¥ (550)¥ 1,350

¥−

¥

367

¥ (983)¥ 1,350

¥–

¥

800

¥ (550)

¥

(11)

¥

¥

515

¥–

¥

38

¥

8,367

–

ended March 31, 2014 and March 31, 2013, respectively.

rules for derivative transactions which stipulate the purposes

Sell position−Metal¥ 10,651¥−

and scope of using derivatives, standards for choosing transaction

Buy position−Metal

8,696

−

and administration.

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

Commodity:
Forward contracts:

General Manager of the department in charge after consulting

cost thereof, the Company and its consolidated subsidiaries

with related departments. Based on these rules, the person

write down the book value of the securities considering thein charge sets up a position. Then, the results are reported topossibilities for recovery of the fair value.

directors monthly.

Call option−Metal

14,638

−

(108)

(108)

10,686

–

(101)

(101)

¥ 33,985¥−¥ (119)¥ (119)¥ 19,568¥–¥ (169)¥ (169)Total

Status of derivative transactions — The Company and its consoli-of the Company regularly examines derivative transactions.

Forward contracts:
Buy position−U.S. dollars

hedge various risks, such as fluctuations in the price of metals,

exposed to market risks arising from commodity derivative

exchange rates and interest rates, in the normal course oftransactions, because the risk of a fluctuation in market prices

Interest:

business. Derivative instruments include futures contracts

that is caused by the time lag between the purchase and saleInterest rate cap contracts:

for hedging against fluctuations in the international priceof materials and products is hedged by corresponding future

Buy positionOver
1 year

$−

$

457

$

457

$−

$

457

$

457

$ 13,122$−$ 3,567$ (9,555)$ 13,122$−$ 3,567$ (9,555)$$

against fluctuations in exchange rates, interest rate swaps

utilize currency derivative transactions to hedge against theand interest rate caps for hedging against fluctuations in themarket risk of exchange rate or interest rate fluctuation. Taking

interest rates of floating-rate bonds and term loans payable.

receivables and payables denominated in foreign currencies

Sell position−Metal$ 103,528$−

into account, the Company and its consolidated subsidiaries

Buy position−Metal

84,526−

dated subsidiaries may incur as a result of changes in market

Recognized
gains (losses)$ 90,251

contracts. The Company and its consolidated subsidiaries also

Market risk is the potential loss the Company and its consoli-

Market value$ 90,251of metals, forward foreign exchange contracts for hedging

are not exposed to market risk.

38
(106)

2014

Currency:

subsidiaries are subject to market and credit risks.

(106)

Contracted amounttransaction counterparties. Also, the internal audit department

Derivative transactions of the Company and its consolidated−―

Thousands of U.S. dollars

5 Derivative transactions

The Company and its consolidated subsidiaries are not(11)

Sell position

Derivative positions are confirmed semi-annually with thedated subsidiaries utilize derivative transactions in order to−―

Option contracts:

Derivative transactions are subject to approval by the

declines between 30% and 50% compared to the acquisition

Recognized
gains (losses)¥−

subsidiaries involving derivative transactions have their own

and its consolidated subsidiaries write down the book value ofMarket value¥−¥3 million (US$29 thousand) and ¥908 million during the year

counterparties and procedures with respect to reportingOver
1 year

¥ 9,285

Each department of the Company and its consolidated

If the fair value of available-for-sale securities declines by overTotal

¥ 9,285(4) Impairment losses on available-for-sale securities amounted to

50% compared to the acquisition cost thereof, the Company

Market value

Forward contracts:

entered into solely with highly rated financial institutions, theirby banks, so that the Company and its consolidated

Contracted amount
Recognized
gains (losses)

Currency:

year ended March 31, 2013 amounted to ¥203 million andNo losses on sales of available-for-sale securities were2013

Commodity:
Forward contracts:
(107)
−

(107)
−

Option contracts:
Sell position
Call option−Metal

142,282−(1,050)(1,050)$ 330,336$−$ (1,157)$ (1,157)

values. The Company’s and its consolidated subsidiaries’ exposure
to market risk are determined by a number of factors, including
fluctuations in market prices, exchange rates

54

55

Derivative transactions for which hedge accounting has been applied for the year ended March 31, 2014 and 2013 consisted of the following:Thousands of U.S. dollars

Millions of yen
Contracted
amount and
other

2014
Type of transaction

Type of derivative transaction

Currency

Forward contracts:
Buy position
U.S. dollars

Type of derivative transaction

Currency

Forward contracts:
Buy position
U.S. dollars

Foreign currency expectedtransaction

¥

1,154

¥

−

¥

6

¥

1,154

¥

−

¥

6

Interest

Total

¥

8,282

¥ 5,916¥(42)

Paid fixed/received floating

¥

8,282

¥ 5,916¥(42)

Commodity

Sell position−Metal

Accounts receivable

Buy position−Metal

Accounts payable

¥

2,319

¥

23,212

−

¥

1,123

60,701

Accounts receivable

60,701

566

399

−

¥ 86,631¥ 61,824

Accounts receivable

$

(408)

$ 57,504

$

(408)

$

−

$

10,916(1,788)

Accounts receivable

590,017590,017

5,502

Put position−Metal

Accounts receivable

142¥

Interest

982

625

Long-term loans¥ 24,602¥ 17,573¥(829)¥ 24,602¥ 17,573¥(829)

Contracted
amount and other

Contracted
amount and otherover 1 year

Fair Value

Paid fixed/received floating

Long-term loans

Long-term loans−$ 600,933

$

6,075

$ 239,133$ 170,811$(8,058)$ 239,133$ 170,811$(8,058)1,380* Commodity call option contracts are based on zero cost option contracts. There is no transfer of option fees.
** 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.

6 Inventories
Inventories as of March 31, 2014 and 2013 consisted of the following:

Major hedged items

Total

3,878
$ 842,059

Interest rate swap contracts**:
Total

2013

Commodity$ 57,504$ 80,502

225,622

Total

Millions of yen

Paid fixed/received floating$ 80,502$ 22,541

Sell position* Commodity call option contracts are based on zero cost option contracts. There is no transfer of option fees.
** 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.

Interest rate swap contracts:

Long-term loans

Accounts payable

Call position−Metal*

Total

Type of derivative transaction

58

Accounts receivable

Option contracts:

Interest rate swap contracts**:

Interest

58$

Buy position

Total

Type of transaction$−

Buy position−Metal
101

Buy position

Paid fixed/received floating−$

Sell position−Metal(184)

Sell position

Interest$$ 11,217

Forward contracts:

Option contracts:

Put position−Metal$ 11,217

Interest rate swap contracts:

Forward contracts:

Call position−Metal*

Foreign currency expectedtransaction

Total
Long-term loans

Fair Value

Major hedged items

Total

Interest rate swap contracts:
Paid fixed/received floating

Commodity

Fair Value

Type of transaction

Major hedged items

Total
Interest

Contracted
amount and otherover 1 year

Contracted
amount and other2014

Contracted
amount and otherover 1 year

Millions of yen

Thousands of U.S. dollars

2014

2013

2014

¥

8,649

¥ 8,649¥(67)

Merchandise and finished products¥ 62,304¥ 62,469¥

8,649¥ 8,649¥(67)

Work in process

45,05740,299437,957

Raw materials and supplies

48,52540,194

471,666¥ 155,886¥ 142,962$ 1,515,222

Forward contracts:
Sell position−Metal

Accounts receivable¥ 17,675

Buy position−Metal

Accounts payable

20,163

¥

609

–

¥

810
226

Accounts receivable

77,73072,739(4,082)¥ 115,568¥ 73,348¥ (3,046)¥ 25,693¥ 25,693¥ (1,334)¥ 25,693¥ 25,693¥ (1,334)$

605,599

Option contracts:
Sell position
Call position−Metal*
Total
Interest

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 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.

56

57

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

Millions ofyen

Thousands of
U.S. dollars

Loss

Loss

The Company categorizes operating assets by such business

8 Bank loans and long-term debt

units as plants and manufacturing processes based on the

Bank loans are generally represented by short-term notes

divisions of managerial accounting.

(most of which are unsecured) and bank overdrafts, and bore

Loss on impairment was recognized for the following reasons:

Major use

Asset category

Kashima City, Ibaraki Prefecture, Japan

Rental properties

Land and building and structuresand machinery

Niihama City, Ehime Prefecture, Japan

Manufacturing facilities for powdermaterials

Building and structures andmachinery and other assets

381

3,703

(2) The book values of manufacturing facilities for certain

Chitose City, Hokkaido Prefecture, Japan

Idle land

Land

42

408

copper-clad polyimide film substrates were reduced to¥ 1,253$ 12,179¥830$ 8,068(1) The book value of building for camping was reduced tointerest at annual rates of 0.41% to 6.00% and 0.55% to 5.60%
as of March 31, 2014 and 2013 respectively.

the recoverable amount due to expectation that its use wouldcease due to the ceasing of exploration activities.

recoverable amounts due to expectations that these
Total

The Company categorizes its operating assets by such business(2) The book value of manufacturing facilities for powder

facilities would cease to operate.

The net sales prices (fair values less costs to sell) of assets

units as plants and manufacturing processes based on thematerials were reduced to recoverable amounts due towere used as recoverable amounts for the measurement

divisions of managerial accounting.

stagnation in sales volume of nickel powder.

of impairment losses.

The values in use of assets were used as recoverable amounts

Loss on impairment was recognized for the following reasons:for the measurement of impairment losses.

(1) The book values of rental properties were reduced to

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

recoverable amounts due to expectation that their use wouldcease after the termination of the lease contracts.

(3) The book value of idle land was reduced to the recoverable

Long-term debt as of March 31, 2014 and 2013 consisted of the following:
Millions of yen

Thousands of U.S. dollars

2014

2013

2014

Secured¥ 23,603¥ 10,892

Unsecured

140,461

136,858

1,365,289

Secured

3,000

3,000

29,160Unsecured

94,174

68,592915,377

0.48% domestic bonds due in 2016

10,00010,00097,201

0.77% domestic bonds due in 2018

30,00030,000291,602

1.26% domestic bonds due in 2021

10,00010,00097,201

311,238

269,3423,025,253(18,108)(7,019)(176,011)¥ 293,130¥ 262,323$ 2,849,242

The net sales prices (fair values less costs to sell) of assets wereamount along with the decline in the market price of land.

used as recoverable amounts for the measurement of impair-The net sales price (fair value less cost to sell) of the asset wasment losses. The net sales prices were estimated based on

used as the recoverable amount for the measurement ofBanks, insurance companies and other financial institutions,third-party appraisal or by similar means.

impairment loss. The net sales price was estimated based on

maturing through 2022 at interest rates of 0.61% to 3.50%:

third-party appraisal or by similar means.

Long-term loans from:$229,423

Government owned banks and government agencies,
maturing through 2025 at interest rates of 0.20% to 2.00%:

Loss on impairment of fixed assets for the year ended March 31, 2013 consisted of the following:
Millions of
yen

2013
Location

Major use

Asset category

Choiseul, Solomon Islands

Building for camping

Building

Niihama City, Ehime Prefecture, Japan

Manufacturing facilities for certain
copper-clad polyimide film substrates

Total

Loss

¥

Machinery and vehicles

52
146

¥

198
Amount due within one year

58

59

The aggregate annual maturities of long-term debt as of March 31, 2014 are as follows:(Adjustment of deferred tax assets and liabilities based on enacted changes in tax laws and rates)

Years ending March 31,

Millions of yen

Thousands of U.S. dollars

2015¥ 18,108$2016

16,216

157,6212017

33,596

326,555

2018

10,16598,804

2019

44,835435,799

Thereafter

188,318

1,830,463¥ 311,238$ 3,025,253

176,011On March 31, 2014, amendments to the Japanese tax regulations were enacted into law. As a result of these amendments, the statutory income
tax rate for the Company will be reduced from 38.0% to 35.6% from the year beginning on or after April 1, 2014. Based on the amendments, thestatutory income tax rate utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized between April 1, 2014
and March 31, 2015 has been reduced from 38.0% to 35.6% as of March 31, 2014. Due to this change in statutory income tax rate, net deferred
tax liabilities increased by ¥10 million (US$97 thousand) as of March 31, 2014 and deferred income tax expense recognized for the year ended
March 31, 2014 decreased by the same amount.
Significant components of the Company’s and its consolidated subsidiaries’ deferred tax assets and liabilities as of March 31, 2014 and 2013 are as
follows:
Millions of yen

Thousands of U.S. dollars

2013

2014

2014
Assets pledged as collateral for bank loans and long-term debt as of March 31, 2014 and 2013 are as follows:
Thousands of U.S. dollars

2013

2014

Retirement benefits

807

2014
Cash and cash equivalents¥

83

Deferred tax assets:

Millions of yen

¥

272

$

¥

6,014
−

¥

5,598

$

58,457

4,827−

Net defined benefit liability

4,579

–

44,508Property, plant and equipment, at net book value

50,61638,875491,991

Overseas exploration cost

2,707

1,496

26,312

Investment securities

74,69062,683725,991

Unrealized profits

2,529

1,717

24,582Other long-term receivables

23,045

16,911

223,999

Loss on impairment of fixed assets

2,141

2,649

20,811¥ 148,434¥ 118,741$ 1,442,788

Allowance for bonus payable

1,353

1,308

13,151

Contribution gains on securities to employee retirement benefits trust
9 Income taxes

1,189

1,078

11,557

Accrued environmental measures

838

120

8,145

Depreciation

576

670

5,599
4,170

Accrued business taxes

429

1,095

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

Deferred losses on hedges

177

1,586

1,721

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

Others

4,353

4,684

42,311subject to income taxes of the countries in which they are

purposes for the years ended March 31, 2014 and 2013:

26,88526,828261,324(8,329)(8,800)(80,959)

18,55618,028180,365

Income taxes in the accompanying consolidated statements
of income comprise corporation taxes, inhabitants’ taxes

The following table summarizes the significant differences

Gross deferred tax assets
Less valuation allowance

domiciled.

60

Net operating loss carry forwards

Deferred tax assets-less valuation allowance
2014

2013

Statutory tax rate

38.0%

38.0%

Net unrealized holding gain on available-for-sale securities(14,515)(10,425)(141,087)

Equity in earnings of unconsolidated subsidiaries and affiliated companies

(7.4)

(4.5)

Depreciation(8,559)(6,646)(83,194)

Effect of eliminating intercompany dividends received

18.8

14.2

Reserve for losses on overseas investment(4,081)(4,205)(39,668)

Permanently nontaxable dividends received(19.8)(14.9)

Accumulated earnings of overseas subsidiaries(3,737)(4,091)(36,324)

Tax credit

(0.9)

(0.5)

Deferred gains on properties for tax purpose(2,346)(2,203)(22,803)

Effect of mining taxes

(0.9)

(2.2)

Reserve for explorations(1,180)(1,424)(11,470)

Undistributed earnings of foreign subsidiaries

(0.4)

0.6

Gain on securities contributed to employee retirement benefits trust

(520)

(520)

(5,054)

Difference in local tax system

(4.4)

(3.0)

OthersIncrease (Decrease) in valuation allowance

(0.1)

(0.8)

Difference of statutory tax rate in subsidiaries

(1.8)

(0.8)

Loss (Gain) on change in equity

0.4

(1.8)

Refunded income taxes

(0.4)

(0.1)

Others0.2(0.6)

Effective tax rate

21.3%

23.6%

Deferred tax liabilities:

Deferred tax liabilities
Net deferred tax assets (liabilities)(1,934)(1,992)(18,798)(36,872)(31,506)(358,398)¥ (18,316)¥ (13,478)$ (178,033)

61

10 Retirement benefits and pension costs(3) For the year ended March 31, 2014

(1)Outline of retirement benefits and pension costs(a)Defined benefit plans

The Company and certain consolidated subsidiaries have a defined benefit pension plan and a defined contribution pension plan.

The detailed notes relating to retirement benefit plans for the 12-month period ended March 31, 2014 are as follows:

The defined benefit pension plan is based upon years of service, compensation at the time of severance and other factors.
Such retirement benefits are provided through a lump-sum benefit or a funded pension plan. The Company has a retirement benefit trust. Some

Movement in retirement benefit obligations,except plan applied simplified method

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

Millions of yen

Balance at April 1, 2013

subsidiaries enroll in multi employer pension plans. Such plans are recognized as defined contribution plans.

¥ 52,374

Service costThousands of U.S. dollars

$

1,802

509,079
17,516(2)For the year ended March 31, 2013

Interest cost

722

7,018

(a)Retirement benefit obligations

Actuarial loss (gain)(307)(2,984)(1,783)(17,331)

113

1,097

Benefits paid

The projected benefit obligations and the funded status of the plans at March 31, 2013 are summarized as follows:
Millions of yen

2013
Projected benefit obligations¥ (57,150)

Fair value of pension assets

45,854

Excess of projected benefit obligations over pension assets

Other
Balance at March 31, 2014

5,735

Unrecognized prior services costs

15

Net retirement benefits¥(5,546)

Prepaid pension costs

155

Accrued retirement benefits¥(5,701)$

514,395

Movements in plan assets,except plan applied simplified method
Millions of yen¥ (11,296)

Unrecognized actuarial differences¥ 52,921

Balance at April 1, 2013

¥ 42,833

Expected return on plan assets
Actuarial loss (gain)Contributions paid by the employer
Benefits paid
Balance at March 31, 2014

Thousands of U.S. dollars$

416,339

922

8,962

5,732

55,715968

9,409(1,132)(11,002)¥ 49,323$

479,423

The Company contributed securities to the employee retirement benefit trust, which are included in pension assets.
(b)Components of severance and retirement benefit expenses

Movements in liability (asset) for retirement benefits,plan which applied simplified method
Millions of yen

The components of net periodic pension and severance costs excluding the employees’ contributory portion for the years ended March 31, 2013 are as follows:
Millions of yen

Service cost-benefits earned during the year¥

Balance at April 1, 2013

¥

1,755

Thousands of U.S. dollars$

17,0592013

Retirement benefit costs(104)(1,011)

1,838

Benefits paid

(138)

(1,341)

Contributions paid by the employer(215)(2,090)Interest cost on projected benefit obligations

966

Expected return on plan assets

(809)

Other

Amortization of actuarial differences

473

Balance at March 31, 2014

Amortization of prior services costs

(26)
¥

1,272

(253)
$

12,364(319)

Severance and retirement benefit expense

¥

2,149

Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
Millions of yen(c) Basis for calculation of Retinement benifit obligations
Assumptions used in calculating the above numbers are as follows:
March 31, 2013

Funded retirement benefit obligations

Discount rate

1.4%

Plan assets

Expected rate of return on plan assets

3.5%

Method of attributing the projected benefits over average remaining service period

Straight-line

Unfunded retirement benefit obligations

Average remaining service period

10 years

Total net liability for retirement benefits at March 31, 2014

Amortization of actuarial differences

10 years from the following that in which they arise
Liability for retirement benefits

2014

2014

¥ (56,944)$ (553,499)

53,007¥ (3,937)(d) Multiemployer pension plans
The amount of required contributions to the multiemployer plans, which are recognized as defined contribution plans, was ¥78 million. The funded statusof the multiemployer pension plans at March 31, 2012, to which contributions were recorded as net periodic retirement benefit costs, are as follows:

Asset for retirement benefits
Total net liability for retirement benefits at March 31, 2014

Thousands of U.S. dollars

515,231$(38,268)¥ (4,870)$(47,337)¥ (4,961)$(48,221)(933)(9,069)91¥ (4,870)

884$(47,337)

Millions of yen

Plan assets
Retirement benefit obligations based on pension plan finance calculation
Balance62

The percentage of the Groups’ contribution to the multiemployer pension plans at March 31, 2012 was 0.58%.

¥ 288,316
347,662¥ (59,346)

63

11 Research and development expense

Retirement benefit costs
Millions of yen

Service cost

¥

1,795

Thousands of U.S. dollars$

17,448

Research and development expense included in selling, general

2014 and 2013 are ¥6,648 million (US$64,619 thousand),and administrative expenses for the years ended March 31,¥4,999 million, respectively.

consolidated balance sheets.

Interest cost

719

6,989

Expected return on plan assets(922)(8,962)12 Net assets

Net actuarial loss amortization

289

2,809

Net assets comprise three subsections, which are shareholders’

Past service costs amortization(319)(3,101)Retirement benefit costs based on the simplified method(104)(1,011)¥

Total retirement benefit costs for the fiscal year ended March 31, 2014

1,458

$

14,172

Actuarial gains and losses that are yet to be recognized¥

Past service costs that are yet to be recognized
Total balance at March 31, 2014

(619)

(285)

minority interests.

could capitalize by a resolution of the shareholders’ meeting.

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

Additional paid-in capital and legal earnings reserve may

common stock. However, a company may, by resolution of theadditional paid-in capital and all of the legal earning reserve(6,017)

Board of Directors, designate an amount not exceeding one-half of

may be transferred to other capital surplus and retained earnings,

3,247

the price of the new shares as additional paid-in capital, which isrespectively, however which are potentially available for(2,770)included in capital surplus.

dividends.

Thousands of U.S. dollars$$

capital could be used to eliminate or reduce a deficit, or

not be distributed as dividends. Under the Law, however, all334¥

equity, accumulated other comprehensive income, andamount paid for new shares is required to be designated as

Accumulated adjustments for retirement benefit
Millions of yen

Under the Law, legal earnings reserve and additional paid-in

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

The maximum amount that the Company can distribute as

Plan assets

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

dividends is calculated based on the unconsolidated financial1)）Plan assets comprise the following:

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

statements of the Company in accordance with Japaneselaws and regulations.

Bonds

30.8%

paid-in capital and legal earnings reserve must be set aside as

Equity securities

58.0

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

Cash and cash equivalents

6.1

reserve is included in retained earnings in the accompanying

Other

5.1
100.0

Total

13 Contingent liabilities
Contingent liabilities as of March 31, 2014 are as follows:2)）Long-term expected rate of return

Millions of yen

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

Notes and accounts receivable sold to factoring companies with recourse

ing the long-term expected rate of return.

As guarantor for loans payable of:¥Non-consolidated subsidiaries and affiliated companies
Assumptions used in calculating the above numbers are as follows:
March 31, 2014
1.4%

Expected long-term return on plan assets

3.5%

$

3,528

86,569841,456

Electric facilities which provides electic power to Pogo Gold Mine

617

5,997

As a stockholder for future payment of :The mining royalty tax, interests and penalties of Cerro Verde S.A.A

3,042

29,568¥ 90,591$ 880,549(c) Multiemployer pension plans

The amount of required contributions to the defined contribution

The amount of required contributions to the multiemployer plans

plans of the Company and certain consolidated subsidiaries waswhich are recognized as defined contribution plans was ¥82¥265 million (US$2,576 thousand)million (US$797 thousand)Pursuant to the Agreement of Guarantees and Measures to2006 (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-

The funded status of the multiemployer pension plans at March 31, 2013, to which contributions were recorded as net periodic retirement

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

pany’s share of the payment being demanded in case such demandbenefit costs, was as follows:

affiliated company accounted for by the equity method, has paid

is validated is described above.

Plan assets
Retirement benefit obligations based on pension plan finance calculation
Balance*taxes based on the assumption that the mining royalty tax regime of

Cerro Verde had continued to pay taxes for 2009 and onward

Millions of yen

Thousands of U.S. dollars¥ 322,615$ 3,135,838

367,888

3,575,894

In October 2013, the Peruvian national tax authority issued to

had been effective and had exempted the Project. Although the tax(440,056)

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.

¥ (45,273)$

The percentage of the Groups’ contribution to the multiemployer pension plans at March 31, 2013 was 0.46%.
* The principle factor relating to the balance was the prior service obligations in pension financing of △ ¥38,526 million (△US$374,475 thousand).

64

363

As guarantor for the construction costs of:

Discount rate(b) Defined contribution plans

Thousands of U.S. dollars

2004 did not apply to Cerro Verde.

based on the same assumption that the 1998 Stability Agreement

Copper Sulfide Ores Development Project, which commenced in6514 Comprehensive Income(b) Types of products and services of each reported segment

From the year ended March 31, 2014, in order to manage theAmounts reclassified to net income in the current period that are recognized in other comprehensive income in the current or

In the Mineral Resources segment, the Group mainly engages

operations of each segment properly, each reported segment has

previous periods and tax effects for each component of other comprehensive income are as follows:in the exploration, development and production of non-ferrous

borne the amount equivalent to the interest on the internal loan

metal resources in Japan and overseas, as well as sales of ores

payable in each segment’s balance sheet.

Millions of yen

Thousands of U.S. dollars

2014

2013

2014

¥ 10,769¥ 19,814

3

766

30

Sub-total, before tax

10,772

20,580104,705

Tax effect(4,106)(6,949)6,666¥ 13,631

3,666

4,696

In the Smelting & Refining segment, the Group mainly

Net unrealized holding gains on securities
Increase during the year
Reclassification adjustments

Sub-total, net of tax

and other products.

¥$

104,675(39,911)$64,794

Deferred gains on hedges
Increase during the year

35,634

engages in smelting and sales of copper, nickel, ferro-nickel,

In the Materials segment, the Group mainly engages in manufacturing, processing and sales of semiconductor materials such as lead

(474)

328

(4,608)frames, tape materials (copper-clad polyimide film, chip-on-film (COF)

3,192

5,024

31,026

Tax effect(1,283)(2,012)(12,470)

substrates (electronic packaging materials used to make LCD panel

1,909¥ 3,012

Increase during the year

44,60917,918433,602

Reclassification adjustments

1,175

235

11,421$

18,556Sub-total, before tax

45,784

18,153Sub-total, net of tax¥ 45,784¥ 18,153

445,023$

445,023

Share of other comprehensive income of affiliated companies

Sub-total
Total other comprehensive incomehydroxide, lithium nickel oxide) and crystalline materials, manufacturing and sales of automotive exhaust processing catalysts, chemical
catalysts, petroleum refinery and desulfurization catalysts, as well as
autoclaved lightweight concrete (ALC) products. Operating results

accounted for using equity method
Reclassification adjustments

integrated circuits) as well as of advanced materials such as pastes,
powder materials (e.g., nickel powder), battery materials (e.g., nickel

Foreign currency translation adjustments

Increase during the year

method.

such as gold, silver and platinum.

Reclassification adjustments¥

retrospectively restated to present the information under the newzinc and lead, as well as smelting and sales of precious metals

Sub-total, before tax
Sub-total, net of tax

Segment information for the year ended March 31, 2013 was

49,628482,387

11,208−

5,913¥ 49,628¥ 17,121$−¥ 103,987¥ 51,917$ 1,010,760

482,387of the bonding wire business to its completion of withdrawal were
included in the Company’s consolidated statement of income for theyear ended March 31, 2013.

(2) Basis of measurement regarding reported segment income
15 Segment information

area of Mindanao Island in the Philippines—and the Sierra(1) General information about reported segments

Gorda Project—the purpose of which is to participate in a(a) Basis of decision about reported segments

copper mine development project in the Republic of Chile

The reported segments of the Group refer to business units, forare classified as “business segments” of the Group.

which separate financial information is available and that are

The Group integrated these five business segments into

subject to periodic reviews by the Board of Directors as thethree reported segments: “Mineral Resources” “Smelting

supreme, managerial decision-making body to determine the& Refining”, “Materials.” In determining these reported

allocation of management resources and assess their respective

segments, the Sierra Gorda Project are into Mineral Resources andoperating results.

the Taganito Project are into Smelting & Refining, in accordance

The Company currently has three business divisions—with the integration criteria and quantitative standards set forth

Mineral Resources Div., Non-Ferrous Metals Div., Materials Div.—in the “Accounting Standard for Disclosures about Segments ofin the pursuit of effective business operations by products andan Enterprise and Related Information” (ASBJ Statement No. 17

services. Each of these business divisions plans its own compre-

issued on March 27, 2009) and “Guidance on Accounting Standard

hensive strategies to be carried out in Japan and overseas forfor Disclosures about Segments of an Enterprise and Related Infor-

its own product and service lines and engages in diverse businessmation” (ASBJ Guidance No. 20 issued on March 21, 2008).

activities.
The three aforementioned business divisions and theTaganito Project—the purpose of which is to construct a second

As described above, the Group consists of three segments
identified by products and services based on the business divisions.

(loss), segment assets and other material items
The accounting methods for each reported segment are basicallythe same as those set forth in Note 2, entitled the “Summary ofsignificant accounting policies,” excepting the allocation of theamount equivalent to the interest on the internal loan payable toeach segment.
Inter-segment net sales are calculated based on the prices ofarm’s length transactions.

(Change in basis of measurement regarding reported segment
income (loss))
In order to manage the operations of each segment properly, theamount equivalent to common administrative-expenses to be sharedby all segments has been allocated to each reported segment byusing certain allocation ratios from the year ended March 31, 2014.
Until the year ended March 31, 2013, each reported segment
had borne the “cost of capital,” which is obtained by multiplying theassets by an internal interest rate.

High Pressure Acid Leach (HPAL) plant in the Taganito

66

67

(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, 2014 and 2013 are as follows:
Millions of yen

2014

MineralResources

Smelting &Refining

Materials¥ 72,834¥ 614,831¥ 139,445

Others*827,110¥ 3,436

Adjustment**

Consolidated

Outside customers

¥

−

¥

830,546

Total

41,062

17,011

13,88071,953

17,371(89,324)−

113,896

631,842

153,325

899,063

20,807(89,324)

830,546

Segment income¥ 69,063¥ 29,104¥ 11,072¥

109,239¥ 1,581¥

Segment assets¥ 347,987¥ 685,979¥ 151,697¥ 1,185,663¥ 16,437¥ 370,267¥ 1,572,367

Segment liabilities¥ 29,017¥ 342,491¥ 72,503¥

444,011¥ 5,704¥ 103,599¥

553,314

8,782

13,3908,007

30,179318

1,929

32,426

Amortization of goodwill

109

−

18

127

−

−

127

Interest income

308

177

32

517

−

4,120

4,637

Interest expense

60

1,425

408

1,893

14

1,655

3,562

23,006

3,025

3,977

30,008−(238)

29,770183,678

76,212

26,932286,822−42,800329,622

Investment in equity-method
affiliated companies

66,441

Capital expenditures

Inter segment
Total

Depreciation

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

19,38734,656

8,379

62,422

Smelting &Refining

Materials

707,951$ 5,976,196$ 1,355,414$ 8,039,561

682

3,532

¥

3,337

114,352

Millions of yen
Total ofreportedsegments

Others*805,331¥ 3,209

Smelting &Refining

Materials¥ 63,318¥ 602,395¥ 139,618

41,55535,40816,995

93,95812,734(106,692)–

104,873

637,803

156,613899,289

15,943(106,692)

808,540

Segment income¥ 66,105¥ 40,646¥

110,048¥ 1,559¥

Segment assets¥ 293,546¥ 631,375¥ 132,862¥ 1,057,783¥ 16,595¥ 276,775¥ 1,351,153

Segment liabilities¥ 45,040¥ 297,261¥ 70,222¥

412,523¥ 5,801¥¥

Adjustment**

Inter segment
Total

Depreciation

¥

¥

–

3,427

88,282¥¥808,540

115,034

506,606

6,524

12,1696,811

25,504317

1,757

27,578

Amortization of goodwill

89

–

1

90

–

–

90

Interest income

256

175

61

492

–

1,043

1,535

Interest expense
Equity in earnings (losses) ofaffiliated companies
Investment in equity-method
affiliated companies
Capital expenditures

68

3,297

−

$ 8,072,959$ 33,398 $

165,348

134,914699,387

168,847(868,234)−

6,141,544

1,490,328

8,738,948

202,245(868,234)

8,072,959

107,621$ 1,061,811$ 15,367$

34,331$ 1,111,509

Segment income$

671,297

Segment assets$ 3,382,455$ 6,667,759$ 1,474,504$ 11,524,718$ 159,769$ 3,599,018$ 15,283,505

Segment liabilities$

282,047$ 3,329,034$

704,734$ 4,315,815$ 55,443$ 1,006,989$ 5,378,247

Depreciation

85,362130,152

77,829293,343

3,091

18,749315,183

Amortization of goodwill

1,059

−

175

1,234

−

−

1,234

Interest income

2,994

1,720

311

5,025

−

40,04745,072

Interest expense

583

13,851

3,966

18,400136

16,087

34,623

223,620

29,40338,657

291,680−(2,314)289,366

1,785,362

740,785

261,7812,787,928−

416,018

3,203,946

188,443

336,858

81,444

606,745

6,629

32,437645,811Equity in earnings of affiliated companies$

282,893

included in the reported segments and other profit-seeking business$

Other businesses include technical engineering and real estatebusinesses.

Consolidated

Net sales:¥

Consolidated

directly operated by Head Office divisions/departments.

MineralResources

Outside customers

Adjustment**

399,125* The “Others” segment refers to businesses other than those

2013

Others*1,107,076

Inter segment¥

MineralResources

Net sales:

Total ofreportedsegments

Net sales:
Outside customers

2014

Total ofreportedsegments

120

1,007

487

1,614

19

1,668

3,301

18,519(3,424)

2,071

17,166–(66)

17,100166,323

74,75522,324263,402–(3,663)259,739

8,987

40,146

8,221

57,354522

1,415

59,291** “Adjustments” are as follows:
1. Adjustments for segment income are as follows:
Millions of yen

Thousands of U.S. dollars

2014

2013

2014

¥ (2,835)¥ (2,043)$ (27,556)

Internal interest expense

534

786

5,190

Eliminations of inter-segmental transactions among
the reported segments

301

4,566

2,926

Head Office expenses not allocated to each reported segment*

Non-operating income/expenses not allocatedto each reported segment**
Total* Head Office expenses not allocated to each reported

5,532

118

53,771¥ 3,532¥ 3,427$ 34,331** Non-operating income/expenses not allocated to eachsegment mainly consist of general administrative expenses

reported segment mainly consist of foreign exchange

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

gains/losses and interest expenses, which are not attributablesegments.

to the reported segments.

69

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

Thousands of U.S. dollars

2014

2013

2014

Corporate assets not allocated to each reported segment*¥ 473,725¥ 401,205$ 4,604,636

Offset and eliminations of inter-segmental receivables among
the reported segments, including those toward Head Officedivisions/departments(103,458)(124,430)(1,005,618)

Total¥ 370,267¥ 276,775$ 3,599,018

Millions of yen

Thousands of U.S. dollars

2014

2013

2014

Corporate liabilities not allocated to each reported segment*¥ 220,828¥ 275,015$ 2,146,462

Offset and eliminations of inter-segmental payables among
the reported segments, including those toward Head Officedivisions/departments(117,229)(186,733)(1,139,473)

Total¥ 103,599¥ 88,282$ 1,006,989*1*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: China, Taiwan, Hong Kong and South Korea

Regions are segmented based on their geographical proximity, and

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

only those countries for which the net sales amount accounts for

3. North America: United States, Mexico and Canada

more than 10% of the net sales stated in the Consolidated State-

4. Others: Australia, India, Morocco, etc.

ments of Income are separately listed.

(b) Property, plant and equipment
2014* Corporate assets and liabilities not allocated to each reported segment mainly refer to the assets and liabilities under the control of the Admin-¥

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.

140,132¥ 8,213Japan

East Asia

136,036¥ 8,366

Philippines

Southeast Asia

United States

Others212,370¥ 1,624¥ 47,785¥ 5,649

Philippines

Southeast Asia

United States

Others161,365¥ 1,053¥ 28,950¥ 6,297

¥

Total

¥

415,773

Millions of yen¥

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

East Asia

2013

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

3. Adjustments on depreciation refer to depreciation at theMillions of yen
Japan

¥

2014

Total

¥

342,067

Thousands of U.S. dollars
Japan

East Asia

Philippines

Southeast Asia

United States

OthersTotal$ 1,362,092$ 79,831$ 2,064,250$ 15,785$ 464,473$ 54,908$ 4,041,339*1*2

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

Regions are segmented based on their geographical proximity, andMajor countries or regions that belong to the segments are as

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

only those countries for which the property, plant and equipment

follows:

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

amount accounts for more than 10% of the property, plant and1. East Asia: China and Taiwan

equipment stated in the Consolidated Balance Sheets are sepa-

2. Southeast Asia: Malaysia and Singapore

rately listed.

3. Others: Australia, Solomon Islands, Peru, Chile, Brazil

4. Adjustments on interest income consist of interest income atamong the reported segments.
8. Adjustments on capital expenditures refer to increases thereof at
5. Adjustments on interest expense consist of interest expense at
the Head Office divisions/departments, which are not allocated to

the Head Office divisions/departments, which are not allocated(2) Information about major customers

to the reported segments.

the reported segments, and eliminations of transactions among

Millions of yen

Thousands of U.S. dollars

2014

2013

2014

Sales

Sales

Sales

Sumitomo Corporation¥ 123,763¥ 125,184$ 1,202,984

Smelting & Refining, Materials

MITSUI & CO., LTD.

¥ 62,359¥ 58,841$

Smelting & Refining

the reported segments.
Customer’s designation or name
Related information

606,133

Related reported segments(1) Information about geographic areas(a) Sales
2014

Millions of yen
Japan

East Asia

Southeast Asia

North America

Others

171,692¥ 77,489¥ 70,922¥ 11,986

East Asia

Southeast Asia

North America

Others190,772¥ 73,952¥ 60,138

Japan

East Asia

Southeast Asia

North America

OthersTotal$ 4,845,033$ 1,668,857$ 753,198$ 689,366$ 116,505$ 8,072,959¥

498,457

¥

2013

¥

830,546

Millions of yen
Japan

¥

474,408

¥

2014

70

Total

¥

9,270

Total

¥

808,540

Thousands of U.S. dollars

71

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

The asset retirement obligations as of March 31, 2014 and 2013 are as follows:
Millions of yen

Millions of yen

2014

MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated

¥ −

−

423

830

−

¥ 1,253

Loss on impairment of fixed assets

Millions of yen

2013

MineralResources

Smelting &Refining

Materials

OthersAdjustment

¥ 52

–

146

–

–

Loss on impairment of fixed assets

Consolidated¥

198

Balance at the beginning of the fiscal year

2014

2013

2014

¥ 5,337¥ 4,317$ 51,876

Newly recorded obligations
Adjustment due to passage of time
Decrease due to fulfillment of obligations
Increase due to change in estimates
Other

Thousands of U.S. dollars

2014

MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated

$ −

−

4,112

8,068

−

$ 12,180

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

2014
Balance at end of fiscal year

MineralResources¥balance sheets

Smelting &Refining

Materials

OthersAdjustment

−

100

−

−

469

Balance at end of fiscal year

MineralResources

Balance at end of fiscal year

̶–

(87)

(506)

70

(4,918)

̶−

5

―̶−

929

452

9,029

¥ 5,337$ 58,612

specified under the Water Pollution Control Act, and at the timeof removing its facilities the Company is required to conduct soil

facilities on borrowed buildings and sites to their original condition

Countermeasures Law. However, as the responsibility for fulfilling¥at the time of removal. In cases where the period of use for lease

this obligation is estimated to be deferred, the timing for perform-

assets is unclear or for which no relocation plans are in existence,ing such surveys is unclear. Therefore, asset retirement obligations

asset retirement obligations cannot be rationally estimated. Further-cannot be rationally estimated. Consequently, no corresponding

more, certain sites at our facilities employ hazardous substances

asset retirement obligations are included in these obligations.

569

OthersAdjustment

482

–

–

–

–

MineralResources

Smelting &Refining

Materials

OthersAdjustment

Consolidated$ 4,559

−

972

−

−

$ 5,531

Consolidated¥

482

16 Asset retirement obligations

under asbestos damage prevention regulations of asbestos-related(1) Asset retirement obligations that are recorded in the consoli-

regulations and occupational health and safety regulations of dioxin-

With regard to mines and quarries in operation in Japan, the(9)ConsolidatedMaterials

dated balance sheets

2,683

remediation surveys in accordance with the Soil Contamination

Thousands of U.S. dollars

2014

29

233

The Group is required under leasing agreements to restore certain

Smelting &Refining¥

260

Millions of yen

Millions of yen

2013

3
276

¥ 6,030

Foreign exchange adjustment
Year-end balance

Thousands of U.S. dollars

related regulations, and posts these amounts as asset retirement
obligations.

17 Information for certain leases(1) Finance leases
Lease assets
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.

For lease assets related to finance leases that do not transfer(2) Operating leases
Future minimum lease payments as of March 31, 2014 and 2013 are as follows:

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

Sumitomo Metal Mining Pogo LLC, Sumitomo Metal Mining

Measures for Mine Damages Caused by the Metal Mining Industry,

Arizona Inc., Sumitomo Metal Mining Oceania Pty. Ltd. and Coraletc., the Quarrying Act and leasing agreements to undertake mine

Bay Nickel Corporation are subject to the U.S. GAAP or International

Due within one year

pollution prevention activities for post-use specified facilities andFinancial Reporting Standards, as well as the mining laws andDue after one year

to restore such facilities to their original condition. Based on theseregulations of the United States, Australia and the Republic of therequirements, the Company records as asset retirement obliga-

Philippines, respectively. Based on its business plans, the Company

tions a rational estimate of the expenses required for mine pollution

determines asset retirement obligations by making rational esti-

prevention activities and any removal expenses.

mates of its obligations under such regulations of restoring operat-

For the domestic facilities of the Group in Japan, the Company

ing mines and smelters to their original condition and the expenses

makes rational estimates of the costs of demolishing and conduct-of fulfilling these obligations. Asset retirement obligations are calcu-

ing surveys in accordance with requirements regarding special

lated based on determining the estimated period until expenditure,

removal methods and obligations to conduct environmental surveys

the remaining useful life of facilities and the mine life (13 to 69) andMillions of yen

2014

Total

¥

248

¥

1,391
¥ 1,639¥

Thousands of U.S. dollars

2013

2014

139

$ 2,411757

13,521896$ 15,932

discounted by the rates of 1.53% to 11.0%.

72

73

18 Business combination(d) Name of company after business combination(Integrated lead frame business and copper products business)
The Company and Hitachi Cable, Ltd. (“Hitachi Cable”) resolved

SH Materials (a consolidated subsidiary of the Company)(e) Summary of transaction(2) Period for which performance results of acquired

thereofcompany were included in consolidated statements ofincomeon October 29, 2012 to integrate the two companies’ lead frame

By integrating the lead frame businesses of the Company

business operations and have the Company invest into Hitachiand Hitachi Cable, both companies’ production facilities andJuly 1, 2013 to March 31, 2014
Value of the acquisition(the fair value of the common stock which SH Materials delivered on the dateof the business combination)

Cable’s copper products business (excluding its copper tube andmanufacturing technologies will be merged and will comple-

brass operations), and signed an agreement to formally seal thisment each other, the distribution channels and selling powerbusiness integration. Licenses and permissions have been attained

will be effectively utilized and sales and management services

in accordance with competition laws in the relevant countries, andstructures will be further streamlined, which would result in

Incidental expense(advisory fee, etc.)

operations of the integrated lead frame and copper products busi-

synergistic effects and enhanced competitiveness.

Total acquisition costness commenced on July 1, 2013.

(3) A cquisition cost of acquired company and breakdown

Millions of yen

Thousands of U.S. dollars¥ 2,000$ 19,440

86836¥ 2,086$ 20,276(2) Outline of applied accounting treatment
This transaction was accounted for as a transaction underPrior to the integration of the lead frame business, the Company

common control in accordance with ASBJ Statement No.21,

established SH Materials Co., Ltd. (“SH Materials”) as its wholly

entitled the “Accounting Standard for Business Combinations”

owned subsidiary on January 7, 2013. The Company transferred theand ASBJ Guidance No.10, entitled the “Guidance on Accounting

lead frame business to SH Materials via an absorption-type com-

Standard for Business Combinations and Accounting Standard forpany split on July 1, 2013.

Business Divestitures” (both issued by ASBJ on December 26,2008).

(4) Number and type of equity interests delivered

Goodwill was the excess of the fair value of the consideration

200,000 shares of common stock of SH Materials

over the net amount of identifiable assets and liabilities.

(5) Amount of goodwill, reason for recognition,amortization method and period(a) Amount of goodwill¥118 million (US$1,147 thousand)(b) Reason for recognition(c) Amortization method and period
The Straight-line method over five years(6) Primary assets and liabilities assumed as of the acquisition
date

SH Materials succeeded the lead frame business of Hitachi Cable
via an absorption-type company split, and the Company transferred(Business combination through acquisition)

parts of its shares of common stock in SH Materials to Hitachi(1) Outline of business combination

Cable on July 1, 2013. As a result, the shareholding ratios of the(a) Name and description of business of acquired company

Company and Hitachi Cable against the total number of SH Materi-

Name of acquired company:

als’ outstanding shares became 51% and 49%, respectively.

Description of business ofacquired company:

Regarding the copper products business, the Company acquired

Hitachi Cable

Lead frame businessCo., Ltd., a consolidated subsidiary of Hitachi Cable (“SH Copperand Hitachi Cable, both companies’ production facilities andProducts”). Consequently, SH Copper Products became a jointly

manufacturing technologies will be merged and will comple-

controlled company of the Company and Hitachi Cable and has

ment each other, the distribution channels and selling power

been included in affiliated companies accounted for by the equity

will be effectively utilized and sales and management services

method.

structures will be further streamlined, which would result insynergistic effects and enhanced competitiveness.

(d) Legal form of business combination

Name of business:

Lead frame business

Absorption-type split in which Hitachi Cable is the splitting

Description of business:M anufacture and sale of leadcompany and SH Materials is the successor company

frames and related products(b) Date of business combination
July 1, 2013(c) Legal form of business combination

74(c) Date of business combination
July 1, 2013(a) Name and description of businessThousands of U.S. dollars

800$ 7,776

2,468

23,989Total assets¥ 3,268$ 31,765

Current liabilities¥$ 2,916

Noncurrent assets

Total liabilities

300
1,000

9,720

¥ 1,300$ 12,636(b) Reason for business combination
By integrating the lead frame businesses of the Company(1) Outline of transaction¥

Current assets

Noncurrent liabilities

50% of the common stock outstanding of SH Copper Products(Transaction under common control)

Millions of yen(7) Estimated effect on consolidated statements of income
assuming business combination had been completed at the
beginning of the year ended March 31, 2014.

Absorption-type split in which the Company is the splitting

based on, among other reasons, the relative voting rights in thecompany and SH Materials is the successor company

combined company.

(d) Name of company after business combination
SH Copper Products (became an affiliated company accounted

was immaterial.

for by the equity method of the Company)(e) Summary of transaction(Formation of a jointly controlled company)

Through the stable and speedy supply of materials to the lead

(1) Outline of transaction

frame business based on this business combination, the abil-(a) Name and description of business

ity to produce and develop higher quality copper strips used in

Name of business:

Copper products businesssemiconductors will be strengthened.

Description of business:

Manufacture and sale of copper

Furthermore, efforts will continue to be made in expanding theproducts (copper strips, copper

use of copper products in automotive and industrial applications

products for electric applications,and competitiveness will be enhanced as a comprehensive

machine-fabricated parts of copper)

manufacturer of copper products.

SH Materials (consolidated subsidiary of the Company)

SH Materials was determined to be the acquiring company

Acquisition of common stock of SH Copper Products

The effect on operating results for the year ended March 31, 2014(e) Name of company after business combination( f ) Main reason for determining the acquiring company(c) Legal form of business combination(b) Date of the business combination
July 1, 201375

(2) Outline of applied accounting treatment( f ) Formation and reason for having jointly controlled company(2) Condensed financial information of a major affiliatedSociedad Minera Cerro Verde S.A.A.

companies

In forming this jointly controlled company, the Company andThis transaction was accounted for as formation of a jointly

Hitachi Cable concluded a shareholders’ agreement under which

controlled company in accordance with ASBJ Statement No.21,

Pursuant to the relevant accounting standards, condensed financial

Total current assets¥ 188,184

SH Copper Products will become the jointly controlled company

entitled the “Accounting Standard for Business Combinations” andinformation of major affiliated companies which are disclosed for

Total long-term assets

161,759

the years ended December 31, 2013 and 2012 are as follows:

Total current liabilities

23,584

Total long-term liabilities

27,750Total net assets

298,609

Net sales

169,758

Net income before tax

96,998Net income

61,619ASBJ Guidance No.10, entitled the “Guidance on Accountingof both companies.
Consideration paid at the time of the business combination con-Standard for Business Combinations and Accounting Standard forsisted entirely of shares with voting rights.

Business Divestitures” (both issued by ASBJ on December 26,

No other specific facts indicated that a controlling relationship2008).

2013

existed. It was, therefore, decided that the business* Hitachi Cable merged with Hitachi Metals, Ltd. on July 1, 2013.

combination was to be formed by having a jointly controlled

Millions of yen

The name of the resulting company is Hitachi Metals, Ltd.

company.

Sociedad Minera Cerro Verde S.A.A.
2014
19 Related party transaction(1) Related party transaction
Related party transaction for the years ended March 31, 2014 and 2013 are as follows:
2014
Name of related party

Location

Capitalinvestment

Segment

Description of thebusiness relationship

Votinginterest

Transaction detailThousands of
U.S. dollars

Sierra Gorda S.C.M.

Santiago,
Chile

Amounts
Millions ofyen

Mineral$ 934,302 Resources

Debt guarantee and pledge as
security for the loan etc. fromIndirectly the financial institution
45.0%
Loans

Thousands of
U.S. dollars¥ 82,729$ 804,131

Pledge as security**

72,016700,000

Loans receivable***47,164458,437

Debt guarantee*

Location

Capitalinvestment

Segment

Votinginterest

Description of thebusiness relationshipTransaction detailThousands of
U.S. dollars

Sierra Gorda S.C.M.

*

Santiago,
Chile

Mineral$ 934,302 Resources

Debt guarantee and pledge as
security for the loan etc. fromIndirectly the financial institution
45.0%
Loans

Debt guarantee*$ 1,710,605

Total long-term assets

332,761

Total long-term assets

3,234,458

Total current liabilities

45,026

Total current liabilities

437,656

Total long-term liabilities

33,024

Total long-term liabilities

Total net assets

430,698

Total net assets

4,186,412

Net sales

177,037

Net sales

1,720,811

Net income before tax

92,511

Net income before tax

899,213

Net income

59,934

Net income

582,562

Sierra Gorda S.C.M.
2014

Millions of yen

2014

Thousands of U.S. dollars

Total current assets

411,520

Total long-term assets

4,000,000

Amounts

Total current liabilities

40,397

Total current liabilities

392,661

Millions ofyen

Total long-term liabilities

330,315

Total long-term liabilities

3,210,682¥ 60,049

Total net assets

98,755

Total net assets

52,646Loans receivable***22,628** 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$563,248

959,905

Net sales–

Net sales–

Net income before tax–

Net income before tax–

Net income–

Net income–

Compania Contractual Minera Candelaria
2014

76

320,995¥ 57,947

Pledge as security**

Sierra Gorda copper project. The amounts of security is the debt balance as of March 31, 2014 and 2013.

Thousands of U.S. dollars

Total current assets

Total long-term assets

The Company guarantees the loan etc. from the financial institution***The Company determined terms and conditions of loan based on market interest rates, etc.

2014

¥ 175,987

Total current assets

2013
Name of related party

Millions of yen

Total current assets

Millions of yen

2014

Thousands of U.S. dollars

Total current assets¥ 62,138

Total current assets

Total long-term assets

162,656

Total long-term assets$

1,581,026

603,985

Total current liabilities

14,073

Total current liabilities

136,790

Total long-term liabilities

19,660Total long-term liabilities

Total net assets

191,061

Total net assets

1,857,125

Net sales

139,778

Net sales

1,358,651

Net income before tax

72,631

Net income before tax

705,978

Net income

55,875

Net income

543,108

191,09677

Independent Auditors’ Report

20 Earnings per share
Reconciliation of the difference between basic and diluted net income per share (“EPS”) for the years ended March 31, 2014 and 2013 are as
follows:
Millions of yen

Thousands of U.S. dollars

2014

2013

2014

¥ 80,258¥ 86,640$ 780,113

552,186

556,883−¥ 145.35¥ 155.58$¥ 80,258¥ 86,640$ 780,113

80,65687,520783,981Weighted average number of shares

552,186

556,883−

Assumed conversion of convertible bonds

69,63857,742−

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

1.41

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

Adjusted weighted average number of shares
Diluted EPS (yen and U.S. dollars)

621,824

614,625¥ 129.71¥ 142.40

−
$

1.26

21 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, 2014, was approved at a shareholders’ meeting held on June 23, 2014:

Year-end dividends of ¥20.00 per share

78

Millions of yen

Thousands of U.S. dollars¥ 11,043$ 107,339

79

Glossary

Mineral Resources Business andSmelting & Reﬁning Businessin the Champagne region of central

Metal Trading

market in Europe in medieval times.

Oxide ores

London Metal Exchange (LME)

Originally used as a unit of exchange

These ores contain metals in oxidized

The LME specializes in trading offor valuing goods in terms of gold or

forms. Unlike sulﬁde ores, oxides need

non-ferrous metals such as copper,

silver weights, the troy ounce is stillnickel, aluminum, lead and zinc. The

used today in gold trading.

Resource Reserves(MCLE) is the technology used in the

Materials BusinessGold

manufacturing process at SMMʼs

Copper-clad polyimide ﬁlm (CCPF)

Canadian standard

nickel reﬁnery. The matte and mixed

CCPF is a polyimide ﬁlm that is coatedsulﬁde ores are dissolved in chlorine

using a copper base. It is used as a

Amount of ore evaluated to have purity

at high pressure to produce high-material for making COF substrates.

much more energy to achieve melting.

at or above the level indicated in thegrade nickel using electrolysis. MCLE

For this reason, the hydrometallurgicalprefeasibility study that is judged to be

is competitive in cost terms, but poses

Leadframesapproach is generally used to reﬁneeconomically recoverable.

signiﬁcant operational challenges, andLeadframes are electronic packaging

only two other producers besides SMM

materials used to form connections

have commercialized it, using similar

in semiconductor chips and printed

technology.

circuit boards. They contain thin strips

using pyrometallurgical techniques.

France that was the site of a major

LME trading prices for metals are

Reservethese ores.

used as the international pricing

Metal Reﬁning

benchmarks for sales of reﬁned metal

Smelting and reﬁning

and purchases of reﬁning ores.

Reﬁning processes extract valuable

Copper concentrates

Ore of purity or quality that is

metals from ores or other raw

Used as raw materials in copper

estimated to be economically

Treatment Charge (TC) and Reﬁning

materials. They fall into two basic

smelting, copper concentrates haveextractable.

Charge (RC)types: pyrometallurgical (dry) anda copper content of about 30%

These are commonly used in thehydrometallurgical (wet). At SMMʼsby weight. The remainder consists

terms of purchase for copper

Toyo site (Saijo, Ehime Prefecture)mostly of sulfur and iron. Copper

concentrate or nickel ore for reﬁning.

copper concentrate preprocessing

concentrates are made mostly from

They are amounts designed to cover(treatment processes) are

reﬁning costs. For example, copper

Resource

nickel or copper.

CopperCopper is fabricated into wires, pipes

Secondary batteries

and other forms. Besides power cables,

Secondary batteries are ones that canAmount of ore expected to becopper is used widely in consumer

be recharged and used again. SMM

sulﬁde ores. Ores extracted fromrecovered, consisting of actuallyapplications such as wiring in vehicles

supplies battery materials that are

pyrometallurgical, while the nickel plantoverseas mines have a typical grade ofrecoverable ore plus slag.

or houses, and in air conditioning

used in the anodes of nickel metal

concentrate contracts may deﬁne a(Niihama, Ehime Prefecture) makes

about 1%. The ores are then “dressed”

systems.

hydride batteries and lithium-ion

purchase price based on the LME priceuse of hydrometallurgical processes

at the mine to increase the purity andat a certain date, minus the TC or RC

throughout. The term ʻsmeltingʼ is

produce concentrate. Most of thebeing used at the time.

used for the extraction of metal

copper ores imported by SMM forfrom ores using melting and heating

smelting in Japan are concentrates.

London ﬁxing(pyrometallurgy). The term ʻreﬁningʼGold is not traded on the LME. Its pricerefers to any process that increases

Nickel oxide ores

the grade or purity of a metal.

Whilst the higher-grade sulﬁde ores areis determined for each transaction
between market participants. The

Japanese standard (JIS)
Recoverable ore

Identiﬁed resources

rechargeable batteries, which supply
Electrolytic nickel

power for hybrid vehicles or notebook

This form of nickel, which has acomputers, among other consumer

Copper and Nickel

purity of at least 99.99%, is used inapplications.

Reserve according to standards of thespecialty steels, electronics materials

respective country.

and electroplating, among otherTotal ore identiﬁed at the site.

applications. SMM is the only producer

used predominantly in nickel reﬁning,

Nickel Production Processof electrolytic nickel in Japan.

ﬁnancial institutions in the London

Pyrometallurgical reﬁning

nickel oxide ores are more prevalent

Coral Bay Nickel Corporation

Bullion Market Association (LBMA)

The precursor ore is melted at highthan nickel sulﬁdes. The sulﬁde-oxide(CBNC)

Ferronickel

agree on a standard price fortemperature in a furnace, and reﬁning

ratio in current nickel reserves is

Based in the Philippines, this SMM

Ferronickel is an alloy containing nickel

gold based on these transactions

techniques are applied to separate

believed to be about 3:7. High reﬁning

subsidiary produces mixed nickel-(about 20%) and iron. Its main use isand publish it on the morning andthe metal in a molten state. While thiscosts and technical issues have limited

cobalt sulﬁdes using HPAL technology

in the manufacture of stainless steel,afternoon of each trading day. This

technique allows large-volume ore

use of oxide ores in nickel reﬁning

and exports the raw materials to thewhich is about 10% nickel by weight.

“London ﬁxing” price is the benchmark

processing, it also requires periodic

to date, but SMM has succeeded in

SMM Groupʼs nickel reﬁning facilities in

Based in Hyuga, Miyazaki Prefecture,

for trading in gold.

furnace maintenance.

reﬁning nickel from low-grade oxide

Niihama, Ehime Prefecture.

SMM Group ﬁrm Hyuga Smelting Co.,ores based on HPAL technology.

Ltd. produces ferronickel.

Pound (lb)

Hydrometallurgical reﬁning

Part of the imperial system of

The ore and impurities are dissolved in

Mixed sulﬁde (MS) ores

HPAL technology enables the recoveryGoldmeasures, the pound is the standard

a solution, and chemical reactions are

CBNC and Taganito produce a mixedof nickel from low-grade nickel oxide

Gold is in demand worldwide forunit of weight used in measuring andused to separate out the metal.

nickel-cobalt sulﬁde intermediateores that traditionally were diﬃcult toinvestment and decorative purposes.

pricing base metals such as copperThis reﬁning method is stable andcontaining about from 55% to 60%

process. SMM was the ﬁrst company

Gold is widely used in Japaneseand nickel, and in TC/RC calculations.

allows for continuous reﬁning, but thenickel by weight. This is used as ain the world to apply it successfully

industry within the electronics sector

One pound equals approximately

solutions required are costly.

raw material in electrolytic nickel

on a commercial scale. The oxide ores

because of its high malleability andproduction.

are subjected to high temperature andductility.

453.59 g; a metric ton equals
approximately 2,204.62 lb.

80

of a metal alloy containing mostly
Main Applications for Metals

High Pressure Acid Leach (HPAL)

Metal Ores

pressure and reacted under stable

Sulﬁde ores

Matte

conditions with sulfuric acid to produce

Troy ounce (toz)These ores contain copper, nickel or

A matte is another term for metal

a nickel-rich reﬁning intermediate.

The troy ounce is the standard unit

other metals chemically bonded to

sulﬁdes. For raw material, electrolyticof weight for precious metals such as

sulfur. Since the application of heatnickel production at SMM also uses a

Matte Chlorine Leachgold and silver. It equals approximately

breaks these bonds, releasing thenickel matte (of about 75‒80% purity)

Electrowinning (MCLE)

31.1 g. It is named after Troyes, a city

sulfur, such ores are generally reﬁned

sourced from P.T. Vale Indonesia.

Matte Chlorine Leach Electrowinning81

Consolidated Subsidiaries and Equity-Method Aﬃliates
As of July 31, 2014

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 in North America

Mineral Resources

Principal Operations

Equity-Method Aﬃliates
Jinlong Copper Co., Ltd.

27

China

Manufacture and sale of electrolytic copperand sulfuric acid

Acids Co., Ltd.

50

Japan

Manufacture and sale of sulfuric acid andrelated products

Consolidated Companies

Sumitomo Metal Mining Arizona Inc.

80

20

Indonesia

Nickel ore mining, nickel smelting

Nickel Asia Corporation

26

Philippines

Nickel ore mining

26

USA

Mining and related operations

FigesbalInvestments in local companies in Chile
operating the Candelaria MineMS Zinc Co., Ltd.

50

Japan

Manufacture and 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

51

Japan

Manufacture and sale of leadframes

SMMA Candelaria Inc.

100

USA

Sumitomo Metal Mining Canada Ltd.

100

CanadaExploration, consulting

Sumitomo Metal Mining Oceania Pty. Ltd.

100

Australia

Resource surveys, mine development andrelated 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

Mineral resources business

SMM Solomon Ltd.

100

Sumitomo Metal Mining Peru S.A.

100

USA
SolomonIslands
Peru

Sumitomo Metal Mining Chile Ltda.

100

Chile

Investments in local companies in Peru
operating the Cerro Verde Mine

Materials

New Caledonia Nickel ore mining, harbor transportation

Principal Operations

Consolidated Companies
SH Materials Co., Ltd.

Exploration in the Solomon Islands
Okuchi Electronics Co., Ltd.

100

Japan

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

Exploration in South America

Ohkuchi Materials Co., Ltd.

100

Japan

Manufacture of leadframes

Niihama Electronics Co., Ltd.

100

Japan

Manufacture of substrate material (two-layer
plated boards)

Niihama Materials Co., Ltd.

100

Japan

Manufacture of leadframes

SH Precision Co., Ltd.

100

Japan

Manufacture of leadframes

Exploration in South America

Sumiko Solomon Exploration Co., Ltd.

70

Japan

Exploration in the Solomon Islands

Sumac Mines Ltd.

100

CanadaExploration

Stone Boy Inc.

80

USA

Exploration

SMM Sierra Gorda Inversiones Ltda.

70

Chile

Investment in the Sierra Gorda Project

SMM-SG Holding Inversiones LTDA.

100

Chile

Investment in the Sierra Gorda Project

Sumitomo Metal Mining do Brasil Ltda.

100

BrazilExploration

Sociedad Minera Cerro Verde S.A.A.

21

Peru

Compania Contractual Minera
Candelaria

20

Chile

Shinko Co., Ltd.

97

Japan

Design, manufacture and sale of printed circuitboardsSH Asia Paciﬁc Pte. Ltd.

100

Singapore

Regional headquarters for overseas leadframe
operations

Cerro Verde Mine

Sumiko Tape Materials Singapore Pte. Ltd.

100

Singapore

Regional headquarters for tape material
operations

Candelaria 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

Malaysian Electronics Materials Sdn. Bhd.

100

Malaysia

Manufacture and sale of thick-ﬁlm paste

Equity-Method Aﬃliates

Compania Contractual Minera Ojos Del
Salado20

Chile

Ojos Del Salado Mine

Sierra Gorda S.C.M.

45

Chile

Sierra Gorda MineSH Electronics Taiwan Co., Ltd.

70

TaiwanManufacture and sale of leadframes

Cordillera Exploration Co., Inc.

25

Philippines

Exploration

Taiwan Sumiko Materials Co., Ltd.

100

TaiwanManufacture of thin-ﬁlm paste

SH Electronics Chengdu Co., Ltd.

70

China

Manufacture and sale of leadframes

SH Precision Chengdu Co., Ltd.

70

China

Manufacture of leadframes

SH Electronics Suzhou Co., Ltd.

100

China

Manufacture and sale of leadframes

Smelting & Reﬁning

Percentage
of VotingShares (%)

Location

Principal Operations

Consolidated Companies
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

Maritime trading, harbor transportation andservices, land transportation

Sumic Nickel Netherlands B.V.

52

Netherlands

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

Coral Bay Nickel Corporation

54

Philippines

Manufacture of nickel and cobalt intermediates

Taganito HPAL Nickel Corporation

62.5

Philippines

Manufacture of nickel and cobalt intermediates

Sumitomo Metal Mining Philippine
Holdings Corporation

82

PT Vale Indonesia Tbk.

100

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

100

Taihei Metal Industry Co., Ltd.

97

Suzhou SH Precision Co., Ltd.

100

China

Manufacture of leadframes

Sumiko Advanced Materials (Suzhou) Co., Ltd.

100

China

Manufacture and sale of alloy products

Sumiko Tec Co., Ltd.

100

Japan

Terminals and connectors for electronic andelectric equipment; related components,
electric wire, power cords and pressurebonding machines and their maintenance;
manufacture and sale of formed products for
optical equipment

Nittosha Co., Ltd.

100

Japan

Plating of metal products, surface treatment
processing and distribution

Sumiko Kunitomi Denshi Co., Ltd.

100

Japan

Manufacture of crystal products and magnetic
materials

Shanghai Sumiko Electronic Paste Co., Ltd.

Philippines

Regional headquarters for the nickel business
69

China

Manufacture and sale of thick-ﬁlm paste

China

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

Dongguan Sumiko Electronic Paste Co., Ltd.

85

China

Manufacture and sale of thick-ﬁlm paste

SMM Korea Co., Ltd.

100

South Korea

Manufacture of heat-, corrosion- and frictionresistant steel castings

Sales support for advanced materials andbusiness operations

SMM Precision Co., Ltd.

100

Japan

Japan

Manufacture and sale of opticalcommunications components

83Corporate Data and Investor Information
As of March 31, 2014

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

100

Japan

Manufacture and sale of lubricants, inparticular molybdenum-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
lightweight aerated concrete), base-isolating
dampers, and other construction materials

JCO Co., Ltd.

100

Japan

Management of facilities using uranium andrelated wastes

Igeta Heim Co., Ltd.

100

Japan

Construction of steel frame and reinforced
concrete apartments and condominiums

100

Japan

Irradiation sterilization service forpharmaceutical products, medical instruments
and pharmaceutical containers; modiﬁcation ofvarious industrial materials

SH Copper Products Co., Ltd.

50

Japan

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

N.E. Chemcat Corporation

50

Japan

Manufacture and sale of catalysts, recovery
and reﬁning of precious metals

Nippon Ketjen Co., Ltd.

50

Japan

Manufacture and sale of desulfurization
catalysts for petroleum processing

Granopt Ltd.

50

Japan

Manufacture and sale of rare earth iron garnet(RIG)

Japan Irradiation Service Co., Ltd.
Equity-Method Aﬃliates

Corporate Data
Founded
1590
Incorporated
1950
Paid-In Capital¥93.2 billion
Number of Employees 8,628 (Consolidated)
Head Oﬃce
11-3, Shimbashi 5-chome,
Minato-ku, Tokyo 105-8716,
Japan

Other

Location

Principal Operations

Consolidated Companies

Sumiko Techno-Research Co., Ltd.

Sumiko Technical Service Co., Ltd.

Sumitomo Metal Mining Engineering
Co., Ltd.

Sumiko Plantech Co., Ltd.

SMM Holland B.V.

100

100

100

100

100

Japan

Environmental measurement veriﬁcation
operations such as water quality, air, soil, noiseand vibration; data collection, adjustment andproduct evolution as well as technologicaldevelopment

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 the environment

Japan

Netherlands

Manufacture of machinery and equipment andrepair work for non-ferrous metal smelting andchemical plants; installation of machinery andequipment and piping work; steel structure
work
Investment in nickel and cobalt development
businesses

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 51,067
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
Number ofshares held Shareholding
ratio (%)
(thousands)

Major Shareholders
Percentage
of VotingShares (%)

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/

The Master Trust Bank of Japan, Ltd. (Trust Account)

27,699

4.76

Japan Trustee Services Bank, Ltd. (Trust Account)

25,646

4.40

Toyota Motor Corporation

18,916

3.25

THE CHASE MANHATTAN BANK, N.A. LONDONSECS LENDING OMNIBUS ACCOUNT

8,314

1.43

Sumitomo Mitsui Banking Corporation

7,650

1.32

THE BANK OF NEW YORK MELLON AS DEPOSITARYBANK FOR DR HOLDERS

7,524

1.29

Sumitomo Realty & Development Co., Ltd.

7,490

1.29

Sumitomo Life Insurance Company

7,474

1.29

Sumitomo Corporation

7,000

1.20

Nippon Steel & Sumitomo Metal Corporation

6,100

1.05

Breakdown of Shareholders(thousands of shares)

Treasury Stock
29,472
5.07%

Financial
Institutions
165,070
28.38%

Individuals
andOthers102,765
17.67%
ForeignInvestors
190,368
32.73%

Securities
Companies
16,951
2.91%
Other Entities
76,99913.24%

Stock Price and Trading Volume
SMM (yen) (left)

TOPIX (points) (left)

Trading volume (millions of shares) (right)

1,500

60

1,000

30

500
Apr. 2012

0Oct. 2012

Apr. 2013

Oct. 2013

Apr. 2014

Note: TOPIX began on 4 January 1968 with a base level of 100.

84

85

SUMITOMO METAL MINING CO., LTD.
11-3, Shimbashi 5-chome, Minato-ku, Tokyo 105-8716, Japan
http://www.smm.co.jp/E/