Medium- to Long-Term Strategy for Value Creation

Review of Past 3-Year Business Plans

Passing through the business reforms conducted after the JCO criticality accident in 1999, SMM’s business plans
have continued up to the current growth strategies of the 2021 3-Year Business Plan (FY2022 to FY2024).
From the time of the Corporate Reform Plan (FY2000 to FY2001) that we formulated in 2000 following the accident, and through our 2001 2-Year Business Plan (FY2002 to FY2003), we implemented the selection and concentration of core businesses as a measure to reinforce corporate organization. From the 2003 3-Year Business Plan
(FY2004 to FY2006) onward, we steered our course toward a growth strategy and realized long-term growth by
expanding and strengthening core businesses, particularly large-scale projects. Following a degree of success inthe 2015 3-Year Business Plan (FY2016 to FY2018), we tackled further growth upon a new stage under our 2018
3-Year Business Plan (FY2019 to FY2021).

2015 3-Year Business Plan
Long-Term
VisionPlans

Become the world leader in the non-ferrous metals
industry and an excellent company of Japan
Mineral Resources• Full-scale production at the Sierra Gorda Copper Mine• Acquire new gold mine interests

Smelting & Refining• Expand Taganito HPAL
• Advance growth strategies using HPAL peripheral technologies• Enhance competitiveness of copper smelting business

Materials orporate governance strengthening
CGlobalization measures

Mineral Resources• Incurred a large impairment loss at the Sierra Gorda Copper
Mine due to a production slump and increase in costs• Entered into the Cote Gold Project• Acquired interest in the Quebrada Blanca 2• Transferred the Pogo Gold Mine interest

Smelting & Refining• Completed 36-kt production structure at Taganito HPAL• Commercialized scandium and chromite recovery• Achieved 450-kt electrolytic copper production volume• Completed 49-kt nickel sulfate production structure• Began Pomalaa Project Definitive Feasibility Study (DFS)Materials• Completed 4,550-t/month battery material production
structure• Completed increase of LT/LN production structure• Developed nickel oxide powder for fuel cell electrodes• Entered into silicon carbide (SiC) business• Withdrew from lead frame business• I ncreased number of outside directors, appointed female

directors• I mplemented International Financial Reporting Standards(IFRS), commenced integrated report publication

FY2019–FY2021

Become the world leader
in the non-ferrous metals industry

40E nhancing and improving site management capability(production capabilities) and management capability Creating new products and businesses Securing and developing the human resources to support
growth

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023(% indicates the Company’s interest)* Transfer of all interests completed in
February 2022

Electrolytic Copper
Production• Stimulate communication with stakeholders both inside andoutside the company• Rebuild an open and vibrant organizational climate

Strengthen the growth foundation of core businesses(Mineral Resources, Smelting & Refining, Materials)
Mineral Resources• Decided to sell all interests in the Sierra Gorda Copper Mine,
which has established stable, full-scale production, as part of theGroup-wide asset portfolio optimization and strategic asset
replacement (transfer of all interests completed in February 2022)• Had steady progress in FY2021 despite factors such as a temporary halt of construction of the Quebrada Blanca 2 Project due
to COVID-19 and an increase in the initial start-up costs of the
Cote Gold Project

Nickel-based ProductProduction
 Electrolytic Nickel Ferronickel Nickel sulfate, other chemical products

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Corporate 2001 2-Yr
2003 3-Yr
Reform Plan Business Plan Business Plan

2006 3-Yr
Business Plan

2009 3-Yr
Business Plan

2012 3-Yr
Business Plan

2015 3-Yr
Business Plan

(kt)
500

2018 3-Yr
2021 3-Yr
Business Plan Business Plan

447

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2006 3-Yr
Business Plan

2009 3-Yr
Business Plan

2012 3-Yr
Business Plan

2015 3-Yr
Business Plan

2018 3-Yr
2021 3-Yr
Business Plan Business Plan

(kt: amounts converted to a nickel content basis)
100

81

75
50
25
0
(FY)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Corporate 2001 2-Yr
2003 3-Yr
Reform Plan Business Plan Business Plan

Profit (loss) before tax

2006 3-Yr
Business Plan

2009 3-Yr
Business Plan

2012 3-Yr
Business Plan

2015 3-Yr
Business Plan

2018 3-Yr
2021 3-Yr
Business Plan Business Plan(¥ billions)
400
300

229.9
200

Materials

1000Strengthen 3-business collaboration centered on cathodematerials for batteries

 issed the 2018 3-Year Business Plan safety-related initiaM
tive target of less than 5 occupational accidents in Japan(FY2021 recorded 20 accidents) Accelerating the search for new nickel deposits and consideration of new projects in response to the discontinuation of feasibility study on the Indonesian Pomalaa Project Strengthening the value chain of the 3-business collaboration (for Ni–batteries), including recycling

0(FY)

Corporate 2001 2-Yr
2003 3-Yr
Reform Plan Business Plan Business Plan

• Concluded a transfer contract with Sumitomo Osaka Cement
Co., Ltd. to acquire their lithium iron phosphate (LFP) battery
materials business on May 1, 2022



50

0
(FY)

Smelting & Refining

Strengthen corporate functions

100

100

• Decided to discontinue feasibility study on the Indonesian
Pomalaa Project in April 2022

• Decided to construct a new battery plant in 2021 (construction
to be completed during the 2021 3-Year Business Plan)• Established a new recycling process with the ability to recycle
copper, nickel, cobalt, and lithium

150

200

2 S
 trengthen 3-business collaboration centered oncathode materials for batteries

3 S trengthen corporate functions

204

200

300

• Steady promotion of growth strategy and swift realization ofcompetitiveness: Aggressive investment• Minimization of lost profits and opportunity loss and consolidation of business base: Defensive investment• Maximally leverage the integrated production structure andwin through overall capabilities, including battery recycling

250

400

1 S
 trengthen the growth foundation of core businesses(Mineral Resources, Smelting & Refining, Materials)• Enhanced responsiveness to changes in the business environment through organizational restructuring• Rebuilt the organizational culture by renewing the Head Office• Enhanced SR (Shareholder Relations) activities for institutional
investors

Issues Morenci (12% + 13%, just 12% up to
FY2015)
 Sierra Gorda (31.5%)*
 Candelaria (16%)
 Northparkes (13.3%)
 Batu Hijau (5%  0%)
 Cerro Verde (16.8%)
 Ojos (16%)
 Quebrada Blanca (25%)

(kt)
300

Medium- to Long-Term Strategy for Value Creation• Profit contribution from expanded battery material and LT/ LN
production• Continuously create and adapt next-generation products

Results2018 3-Year Business Plan

FY2016–FY2018

Copper Interest Production

-100
(FY)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Corporate 2001 2-Yr
2003 3-Yr
Reform Plan Business Plan Business Plan

Growth Rate of Total Assets(book value, compared to theend of FY2000)
SMM
Domestic competitor A
Domestic competitor B
Domestic competitor C

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
(FY)

2006 3-Yr
Business Plan

2009 3-Yr
Business Plan

2012 3-Yr
Business Plan

2015 3-Yr
Business Plan

2018 3-Yr
2021 3-Yr
Business Plan Business Plan

5.11

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Corporate 2001 2-Yr
2003 3-Yr
Reform Plan Business Plan Business Plan

2006 3-Yr
Business Plan

2009 3-Yr
Business Plan

2012 3-Yr
Business Plan

2015 3-Yr
Business Plan

2018 3-Yr
2021 3-Yr
Business Plan Business Plan

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

41

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

FY2022 Results

Profit before Tax analysis (FY2022 result vs. FY2021 result)

In FY2022, consolidated net sales increased compared to theprevious fiscal year due to the significant depreciation of theyen, higher nickel prices, and strong sales of materials forautomotive batteries. Consolidated profit before tax
decreased compared to the previous fiscal year, mainly due
to the lack of the gain on sale from the transfer of the entiretyof the Company’s interest related to the Sierra Gorda Copper
Mine, and the lack of profit from investments accounted forusing the equity method related to this mine, that wererecorded in the previous fiscal year.

Metal Prices and the Exchange Rate

While some market factors served as a tailwind, profits
declined by ¥127.5 billion due to the worsening cost difference, the stagnation of the market environment for the

Smelting & Refining Segment
Segment income increased year over year, due mainly to thesignificant depreciation of the yen and the rising price ofnickel, despite the decline in copper prices.
The production level and sales volume of electrolytic copper increased from the previous fiscal year. Although the production level and sales volume of electrolytic nickel wereaffected by raw material shortages and other factors, they
were on par with the previous fiscal year due to efforts toincrease production toward the end of the fiscal year.
The amount of ferronickel produced and sold declined fromthe previous fiscal year due to the market being sluggish andtrouble with facilities.
The production level at Coral Bay Nickel Corporation(Philippines) was unchanged from the previous fiscal year.
The production level at Taganito HPAL Nickel Corporation(Philippines) rose from the previous fiscal year when there
were reductions in production caused by equipment
problems.

(¥ billions)
400

Materials Segment
Segment income decreased year on year, due mainly todecreased sales of components for electronic parts as a resultof declining demand for smartphones and other products in
China and throughout the world, despite strong sales ofautomobile battery components, for which demand is solidon the back of the shift toward decarbonization.

Profit before Tax Comparison (FY2022 result vs. FY2021 result)

FY2022 result

FY2021 result

ChangeCopper ($/t)

8,551

9,691

(1,140)

Nickel ($/lb)

11.63

9.35

+2.28

Gold ($/toz)

1,805

1,818

(13)

Exchange (¥/$)

135.48112.39+23.09(¥ billions)400-127.5

357.4

42

200

FY2022 result

FY2021 result

ChangeNet sales

1,423.0

1,259.1+163.9Profit / loss before tax

229.9

357.4

(127.5) Equity method profit/loss

36.5

57.5

(21.0)Net income attributable toowners of parent

160.6

281.0

(120.4)

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

-127.5

357.4
36.2

300

-2.7

+10.4

-89.0

-46.5

-25.6

100
Mineral Resources Business

0

FY2021 result

Materials Business

Mineral Resources Business/Smelting & Refining BusinessSpecial factors
Market factors
Gain from the transfer
of Sierra Gorda (FY2021)

Quantitydifference

Unit costdifferentials

Materials

Adjustments

Other foreignexchange gains (losses)*

Other

FY2022 result* Foreign exchange gains and losses included in finance income and costs andother income and expenses

Market Factors (Mineral Resources Business and Smelting &(¥ billions)
Refining Business)

Unit Cost Differentials (Mineral Resources Business and Smelting & Refining(¥ billions)
Business)



Copper (Cu) price/conditions(23.8)



Nickel (Ni) and Cobalt (Co) price/conditions

+5.1





Gold (Au) price, etc.

Foreign exchange difference

+37.8



Inventory evaluation

+18.4

(1.3)

Impact of rising energy prices:

approx. (30.0)

Impact of rising operating material prices, etc.,
approx. (16.5)
Energy prices peaked out in FY2022 but remained high.
In addition, prices of some operating materials remained high.
We will continue to work on improving efficiency and reducing costs, which are thebasis of a manufacturing company.

WEB For volumes related to production and sales of the Mineral Resources and Smelting & Refining businesses, please refer to thefollowing Supplementary Explanation Material of Financial Summary.
https://www.smm.co.jp/en/ir/event/teleconference/

Profit/Loss Excludes Temporary Factors Based on the Current Business Environment (FY2022)
In response to investors’ comments that it is difficult to understand our capability due to the large impact of fluctuations inmetal prices and exchange rates, we have newly disclosed our
profit/loss excluding temporary factors from this fiscal year.
The profit/loss excluding temporary factors for FY2022 (profit
before tax), is the profit/loss excluding fluctuations in metal prices
and foreign exchange rates and the impact of special factors
during the period concerned.

Temporary factors excluded from FY2022 results
Impact of inventory evaluation
Other gain/loss on foreign exchange (financial revenue/expenses, and otherrevenue/expenses)
 Impact of price adjustment in overseas copper mineImage of the impact of inventory evaluation (reference)
Impact of inventory evaluation is the difference between the purchase price of raw
materials and the selling price of products. It occurs temporarily due to fluctuations
in metal prices and foreign exchange rates, but is equalized over the long term.
($/lb)
15.00

+13.9

-132.1-10.3

Purchase of raw materials
13.00

229.9

-2.1

FY2022 result¥229.9 billion

100

FY2022 profit/loss excluding
temporary factors¥150.0 billion ¥160.0 billion

12.00

FY2021 Mineral Smelting Materials
result resources & refining

Positive impact during
price increases

11.00
Purchase of raw materials
9.00

Sale of products
10.00

9.00
Negative impact during
price declines
6.00

0

229.9

-10.3

200

300

+3.1

FY2022 Result (¥ billions)materials business, and the peeling-off of the gain (¥89.0 billion in total) related to the transfer of rights to Sierra Gorda
copper mine in the previous fiscal year.

Medium- to Long-Term Strategy for Value Creation

Mineral Resources Segment
Segment income decreased year on year, despite the significant depreciation of the yen, due mainly to the decrease incopper prices, the decline in the volume of gold shippedfrom the Hishikari Mine in conjunction with its transition to asustainable production, and the lack of a gain from the transfer of the entirety of our interest in the Sierra Gorda Copper
Mine and share of profit of investments accounted for using
equity method related to the mine, which were recorded in
the previous fiscal year.
Mining operations at the Hishikari Mine remained steady,and the sales volume of gold was 4.4 tons as planned.
Production levels at the Morenci Copper Mine (UnitedStates) (in which the Company holds a 25.0% interest, excluding non-controlling interest) rose from the previous fiscal year
to 400,000 tons, due mainly to the cessation of measures todecrease the operating rates of some mills as a COVID-19
countermeasure.
Production levels at the Cerro Verde Copper Mine (Peru) (inwhich the Company holds a 16.8% interest, excluding

non-controlling interest) rose from the previous fiscal year to442,000 tons, due mainly to an increase in ore grade and arise in mill plant operation rates.

Sale of products
8.00

Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Other Adjustments FY2022
result1

2

1. Other: operating segments and other income-seeking business activities that areunder the control of the Head Office divisions/departments and are engaged in bybusiness segments other than those included in the reportable segments.
2. Adjustments: elimination of inter-segmental transactions, general and administrative
expenses, finance income and costs, etc. not attributable to reportable segments.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

43

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

FY2023 Plan
Uncertainties in the global economy have increased due tothe credit crunch caused by inflation and financial instability,
which are negative factors for economic growth, as well as
the expected time required for a full-fledged economic
recovery in China and concerns about excessive debt problems in developing countries.
As for non-ferrous metal prices, although demand is
expected to increase in the medium to long term, mainly forelectric vehicles and renewable energy, there is the risk of adecline due to the current situation where the Chinese economy has not recovered as much as expected and supply
capacity has increased. The balance of supply and demand
for non-ferrous metals is expected to be almost balanced orslightly oversupplied for both copper and nickel.
In the industries related to the materials business, althoughdemand is expected to continue to grow in response todecarbonization and digital transformation (DX), there is therisk of a delay in the full recovery of related markets due tothe uncertain outlook for the global economy and other factors, and the situation remains unpredictable.
For the FY2023 forecast of consolidated operating results(prepared in May), prices of major non-ferrous metals wereset based on the projected future balance of supply anddemand, taking into account the levels at the time the plan
was prepared, and production and sales volumes of major
products were planned based on the actual results at thetime the plan was prepared and other factors. As a result,consolidated net sales are expected to be ¥1,366.0 billion,
consolidated profit before tax ¥77.0 billion, and profit attributable to owners of parent ¥42.0 billion.

Profit before Tax analysis (FY2023 May forecast vs. FY2022 result)
In our forecast of consolidated operating results for FY2023(prepared in May), we expected metal price declines andappreciation of the yen to put pressure on profits. We anticipated the market environment for the materials business to(¥ billions)250

remain sluggish, as it was in FY2022. We also expected a temporary deterioration in equity profit from investments
accounted for using the equity method, which would resultin an overall decline of ¥152.9 billion.

-152.9

229.9

200
+4.6

150

-1.3

-72.1

-21.3
-19.1

100

77.0
-43.7

50
Mineral Resources Busines/Smelting & Refining Business

Metal Prices and the Exchange Rate (May forecast)Profit before Tax Comparison (FY2023 May forecast vs. FY2022 result)

FY2022 result

ChangeCopper ($/t)

8,500

8,551

(51)

Nickel( $/lb)

10.00

11.63

(1.63)

Gold ($/toz)

1,800

1,805

(5)

Exchange (¥/$)

130.00135.48(5.48)-152.9229.9200

FY2023 forecast

FY2022 result

Change1,366.0

1,423.0(57.0)

Profit / loss before tax

77.0

229.9

(152.9) Equity method profit/loss

14.5

36.5

(22.0)Net income attributable toowners of parent

42.0

160.6

(118.6)

Net sales

-89.9

100

-21.3

-2.0
77.0
-25.3

50

0

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Quantity difference

Unit costdifferentials



Copper (Cu) price/conditions

+7.6



Nickel (Ni) and Cobalt (Co) price/conditions(20.1)



Gold (Au) price, etc.

(0.4)



Foreign exchange difference

(3.1)



Inventory evaluation(56.1)

Materials

Other foreign exchange
gains (losses)

Other

FY2023 Forecast

Other
We forecast worsening in equity method affiliates not included in Market factors andMaterials, and in the Other segment.

WEB For volumes related to production and sales of the Mineral Resources and Smelting & Refining businesses, please refer to thefollowing Supplementary Explanation Material of Financial Summary.
https://www.smm.co.jp/en/ir/event/teleconference/

Profit/Loss Excludes Temporary Factors Based on the Current Business Environment (FY2023 May forecast)
FY2022 Mineral Smelting Materials
result resources & refining

Other1 Adjustments2 FY2023
forecast

1. Other: operating segments and other income-seeking business activities that areunder the control of the Head Office divisions/departments and are engaged in bybusiness segments other than those included in the reportable segments.
2. Adjustments: elimination of inter-segmental transactions, general and administrative expenses, finance income and costs, etc. not attributable to reportablesegments.

44

Market factors

Market Factors (Mineral Resources Business and Smelting &(¥ billions)
Refining Business)

-14.4

150

FY2023 May Forecast of Consolidated Operating Results (¥ billions)

FY2022 result

Adjustments

Medium- to Long-Term Strategy for Value Creation

FY2023 forecast(¥ billions)250

0Materials BusinessProfit/loss excluding temporary factors for the FY2023 May forecast (profit before tax), is the profit/loss excluding fluctuations inmetal prices and foreign exchange rates (impact of inventory
evaluation and impact of price adjustment in overseas copper
mines) and the impact of special factors during the period concerned. The difference from the profit/loss excluding temporary
factors for FY2022 is mainly due to differences in price andexchange rate assumptions.

FY2023 May forecast¥77.0 billion

FY2023 profit/loss excluding
temporary factors¥130.0 billion ¥140.0 billion

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

45

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

The 4 Challenges in the 2021 3-Year Business Plan
Our 2021 3-Year Business Plan has the overall theme of renewed challenge for change. It outlines our ongoing efforts to realize ourlong-term vision, targets, and milestone for Vision 2030. It also puts together our responses to the accelerating trend toward carbon
neutrality, digital transformation (DX), and other changes in the social environment into 4 Challenges. As expectations and demand
for non-ferrous metals grow throughout the world, we will transform SMM into the world leader in the non-ferrous metals industry
by promoting these 4 Challenges.

1

Increasing corporate value - Promotion of large-scale projects

Expanding production capacity for battery cathode materials(kt/month)
16

15.0

12

10.0
7.0

8

5.0
4
0
(FY)

2022

2025

2027

2030

 Increase (by FY2030)
 Increase (by FY2027)
 +2,000 tons  Existing

Main Initiatives in Fiscal 2022
See “Business Strategy and Progressof the 2021 3-Year Business Plan,” Battery
Materials Business, p. 70

Quebrada Blanca 2 Project
Copper is attracting attention for its indispensable role in the proliferation of EVs andrenewable energy, and demand for the metal is increasing rapidly. At the Quebrada
Blanca 2 Project in Chile (QB2; SMM interest: 25%) we began loading ores into mainequipment and producing bulk copper concentrates in March 2023. We are graduallyraising the capacity utilization rate of the equipment to achieve full production during2023. Following the start of full operation at QB2, we expect copper production from
our interests to be 280,000 tons/year. As we make progress in confirming mineral
resource volumes though test boring as well as the cost competitiveness of the project, the potential for future expansion plans is increasing.

Main Initiatives in Fiscal 2022
See “Advancement of the Quebrada
Blanca 2 Project,” Progress and Strategyof the 2021 3-Year Business Plan, Mineral
Resources Business, p.57

Improving core business sustainability

3-business collaboration to strengthen the value chain
One of the SMM Group’s major strengths is that it possesses an in-house nickel value
chain of 3-businesses collaborating—the Mineral Resources Business, the Smelting &Refining Business, and the Materials Business. To increase in-house raw material supply
along with battery cathode material production capacity increases, we are not only
moving forward with measures to secure supplies of ore to the existing Coral Bay
Nickel Corporation (CBNC) and Taganito HPAL Nickel Corporation (THPAL) located in
the Philippines but are also searching for new deposits.
We have created a battery-to-battery recycling process that takes pre-processed
used EV batteries, recovers the included nickel, cobalt, copper, and lithium, and thenre-supplies those metals as battery materials. During the 2021 3-Year Business Plan, weare moving forward with demonstrations at a pilot plant, with the aim of constructing
a plant with processing capacity of 10,000 tons per year by the end of 2024 3-Year Planand establishing a processing structure.

Main Initiatives in Fiscal 2022
See “3-Business Collaboration toStrengthen the Value Chain,” Progress
and Strategy of the 2021 3-Year Business
Plan, Smelting & Refining Business, p.63

Shifting Hishikari Mine to a sustainability-oriented operation
The Hishikari Mine is Japan’s largest gold mine, yielding ore of extremely high gradeeven by international standards. The mine produced 6 tons of gold per year during the2018 3-Year Business Plan, but has switched to sustainability-focused operations basedon the mining of recoverable average-grade ore from the 2021 3-Year Business Plan
onward. Looking ahead, the mine aims to acquire new supplies of ore through tunneling to explore deep underground ore bodies, carry out restructuring of its operationalframework to incorporate DX and other latest technologies, and reduce costs.

Medium- to Long-Term Strategy for Value Creation

Demand for automobile secondary batteries is expected to continue to increase dueto the electrification of automobiles, and SMM is increasing its secondary battery cathode material production capacity. We will precisely meet market demand and maintainone of the largest shares of the nickel-based cathode market by building a production
structure that can produce more and more as time goes on—7,000 tons/month in
FY2025, 10,000 tons/month in FY2027, and 15,000 tons/month in FY2030.
In addition, to further increase cost competitiveness, we will introduce into eachbusiness site the Toyota Production System, which has already been introduced atsome manufacturing sites. As for the new plant where equipment installation will becompleted and will launch operation in FY2024, we will position it as a model plant for
promoting DX and work to increase productivity and quality through DX. During the2021 3-Year Business Plan, we will take the lead in recruiting and developing staff forthe new plant and ensure the launch of operations at the plant.

Cathode material production volume2

Main Initiatives in Fiscal 2022
See “Hishikari Mine: Establishment ofa foundation for long-term stable operation,” and “Sustainability Topics,” Progress
and Strategy of the 2021 3-Year Business
Plan, Mineral Resources Business, p.59

Enhancing competitive edge in copper-smelting and refining businessIn our copper smelting and refining business, we are working to establish a production
structure that increases annual electrolytic copper production capacity by 10,000 tons
annually to 460,000 tons by improving facilities at the Toyo Smelter & Refinery, which
launched operation in 1971, and are working to increase the efficiency of internal logistics by investing in improvements in infrastructure. In parallel with the expansion of
production capacity, we are also advancing a series of GHG reduction measures, suchas switching the fuel we use, as we work to improve competitiveness by accelerating
initiatives to decarbonize.

Main Initiatives in Fiscal 2022
See “Meeting the Challenge of
Improving Core Business Sustainability,”
Progress and Strategy of the 2021 3-YearBusiness Plan, Smelting & Refining
Business, p.64

Cote Gold Project
Strategy for Advanced Materials Business expansion
The Cote Gold Project (Canada) (SMM interest: 36.72%) is underway, with the start ofproduction planned between January and March 2024. Our interest production volume for the final year of the 2021 3-Year Business Plan (FY2024) is expected to be 4
tons. Also, we have confirmed new mineral resources through exploration in areas
around the mine, and expect the project’s value to increase through future newdevelopment.

46

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Main Initiatives in Fiscal 2022
See “Advancement of the Cote Gold
Project,” Progress and Strategy of the2021 3-Year Business Plan, Mineral
Resources Business, p.58

The electronic components industry, which requires various types of products handled
by the Advanced Materials Business, is forecast to experience faster growth on accountof the progress in the electrification of vehicles and other developments, such as 5G
and DX. We aim to generate growth that exceeds market growth by always updating
and maintaining an optimal product portfolio through measures such as introducing
new products and technologies, developing new uses, creating and utilizing innovative production processes, and new sales strategies.

Main Initiatives in Fiscal 2022
See “Progress and Strategy of the2021 3-Year Business Plan,” Advanced
Materials Business, p.72

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

47

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

34

Adapting to changes in the social environment

Carbon neutrality

Strengthening safety initiatives

The 2021 3-Year Business Plan includes plans to establish an in-house committee to promote carbon neutrality to keep our GHG emissions below the FY2013 level, develop a plan
for reaching net zero GHG emissions no later than 2050, and implement various necessary
measures. We are also moving forward with individual countermeasures, future plans, anddiscussions related to issues such as creating a path to becoming net zero by 2050 and setting Scope 3 targets in line with the commitment of ICMM and other international industry
groups. In addition to ¥12.0 billion for capital expenditures and testing and research, we will
tackle issues such as developing both advanced materials that contribute to carbon neutrality and new technologies and processes to reduce GHG emitted in existing processes,
and contribute to lessening our carbon footprint though new businesses, such as battery
recycling and the development of cathode materials for solid-state batteries.

Main Initiatives in Fiscal 2022
See “Climate Change,” Vision for 2030,
p.89-91

Investments to reduce GHG emissions

Total ¥12.0 billion

To advance the achievement of our Vision for 2030, in April 2022 we reviewed our sustainability promotion framework and established the Sustainability Committee. The
SMM Group will accelerate the promotion of our sustainability policy, in which westate, “The Sumitomo Metal Mining Group is engaging in the resolution of businessissues that will contribute to the development of a sustainable society, and is working
to improve both our sustainable growth as a business and our corporate value.”¥ 7.0 billion in testing and research related to reduction of GHG emissions, including
up to Scope 3

Main Initiatives in Fiscal 2022
See “Special Feature1: Digital
Transformation (DX) at the SMM Group,”p.78-81

Securing, fostering, and utilizing human capitalAs birthrates dwindle, the population ages, and the labor market grows more fluid, securing
outstanding human capital has grown more difficult, making it an important issue for the survival of companies. We have divided our human capital management activities into the three
categories of the securing, fostering, and utilizing of human capital, and will undertake action
with human capital management set as a top-priority issue in the achievement of our management strategy. In terms of “securing” human capital, we are increasing points of contact withcandidates through steps including expanding long-term internships and improving branding
to increase SMM name recognition. In terms of “fostering” and “utilizing” human capital we aremoving forward with several initiatives, such as enriching OJT and training and revising remuneration and performance evaluation systems and allowances. We are also more actively
investing in human capital, expanding training programs to foster the next generation of management and offering reskilling and recurrent education to instill new skills adapted to change.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Main Initiatives in Fiscal 2022
See “Employees’ Occupational Healthand Safety,” Vision for 2030, p.93

Reorganizing and enhancing sustainability promotion framework¥ 5.0 billion in capital expenditures, including adoption of an internal carbon pricing(ICP) system (boiler fuel conversion, solar power, etc.)

We created a Digital Transformation Committee in April 2021 and launched a Digital
Transformation Department in July 2022 as a body dedicated to executing DX-related measures. With these, we are accelerating our Group-wide DX. During the 2021 3-Year Business
Plan, DX-related initiatives undertaken at the various business department will be integrated
Group-wide, and we will strengthen competitiveness by building a Group-wide DX foundation to achieve our vision of leveraging DX to enhance our competitiveness and create new
businesses. With investment plans that include ¥15.0 billion in DX-related investments, weare aiming to transform business, improve management efficiency and the data literacy of
employees, and develop human resources for DX.

We continue to not achieve our target for number of accidents even though we are
implementing equipment safety measures. This is due to our failure to find dangerous
locations and operations so there are numerous accidents similar to ones that haveoccurred in the past (reoccurring accidents). During the 2021 3-Year Business Plan, we
will stress preventing serious accidents and focus on preventing reoccurring accidents.
With the passing of the baton to the next generation and change in personnel in mind,
we will increase hazard awareness by introducing and expanding more effective training and development through simulation training that employs VR and other technologies, and rebuild leadership of managers and supervisors to deeply instill andmaintain safety awareness. We are also striving to improve the observation skills ofmanagers and supervisors by adopting suggestions from outside consultants.

Main Initiatives in Fiscal 2022

Medium- to Long-Term Strategy for Value Creation

During the 2021 3-YearBusiness Plan

Digital transformation (DX)48

Strengthening the foundation of business management

Main Initiatives in Fiscal 2022
See “Vision for 2030, Material Issues,
KPIs (Indicators and Goals),” p.86-87

Corporate governance
SMM’s corporate governance is a disciplinary framework both for maximizing corporate value and for ensuring sound management practices, so it is one of the mostimportant management issues. To maximize corporate value, we have also set a basic
business portfolio policy. We will manage our business portfolio using return on capital
employed (ROCE) on a consolidated basis as an indicator for each business (2021
3-Year Business Plan ROCE target: 5.5%).
Through striving to enhance our corporate governance, we will conduct efficientand sound business activities, make positive contributions to society, and fulfill our
responsibilities to our shareholders and all other stakeholders in order to realize ourcorporate philosophy.

Main Initiatives in Fiscal 2022
See “Corporate Governance,”
p.100-111

See “Special Feature3: Human
Resources Strategy,” p.128-131

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

49

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

Financial Strategy (basic approach)Because the SMM Group deals in resources that become
depleted, we must always be prepared for participation inlarge-scale projects or M&A in order to acquire new resource
interests. Mineral Resources Business and Smelting & Refining
Business development projects, including the construction of
new smelters and refineries, involve relatively long periods oftime between execution and recovery of investment.
Accordingly, it is important to maintain a sound financial
position that can withstand large temporary cash outflows.
Based on this thinking, we set a consolidated equity ratio(ratio of equity attributable to owners of parent to total
assets) of 50% or more as a foundation for our financial
strategy.
As of the end of FY2022, our consolidated equity ratio(ratio of equity attributable to owners of parent to total
assets) was 60.3%.

Investment
Total Assets, Equity Attributable to Owners of Parent, and Ratioof Equity Attributable to Owners of Parent to Total Assets(¥ billions)
3,000

2,000

58.3

58.3

1,797.7

1,719.7

59.1

63.7
2,268.8

2,707.9
60.3

1,886.050

1,445.3
1,000

0
(FY)

1,047.6

2018

1,001.9

2019

(%)
75

1,631.7

1,113.9
25

2020

2021

2022

0

 Total Assets (left axis)    Equity Attributable to Owners of Parent (left axis)
Ratio of Equity Attributable to Owners of Parent to Total Assets (right axis)

Raw material ores for non-ferrous metals are subject to sharp
price fluctuations related to supply and demand, natural
disasters, and other factors, and it is not always possible tosecure necessary quantities of ores due to price levels. For
this reason, we must secure stable sources of raw materials
through the development of overseas mines and acquisitionof interests. In mine development and acquisition of interests,
and in large-scale overseas projects in the Smelting &Refining Business, we carry out investments by leveraging our
extensive exploration experience, knowledge of mine valuation, and smelting and refining technologies, with country
risk and local issues fully taken into account, to avoid additional investments or increases in costs arising from uncertainty. We also carefully select and execute capital
investments other than large-scale projects, with full consideration of investment effect and efficiency (profitability).
Capital investment in FY2022 was ¥140.8 billion, underlarge-scale capital investments including the Cote Gold

Project and increased production of cathode materials forautomobile batteries.
Our capital investment plan for FY2023 is as follows (as ofMay).
Capital Expenditure(¥ billions)
150

140.8
6.6
18.2

120

24.8

90
60
30
0
(FY)

91.2
47.4
5.8
14.3
13.7
13.6

50.7
3.6
8.2
24.3

2018

2019

14.6

35.1
2.4
6.4
16.1
10.2
2020

64.5
4.0
6.7
22.9
31.0

2021

2022

 Mineral Resources    Smelting & Refining    Materials    R&D, Other

Capital ExpenditurePlan

We believe it is necessary to maintain a certain amount of liquid funds on hand based on overall demand for funds suchas for large-scale overseas projects in the Mineral Resources
and Smelting & Refining businesses, or strategic expansions
within the Materials Business. This is essential from the standpoint of management stabilization. Under that premise, we
conduct funding in line with the use of the funds, while comprehensively considering the outlook for non-ferrous metal
prices and currency exchange, conditions in interest rate
markets, and other factors.
Net cash provided by (used in) investing activities turned
positive in the previous fiscal year, mainly due to gains fromthe divestiture of our entire interest in the Sierra Gorda
Copper Mine. In FY2022, increased investments in theQuebrada Blanca 2 Project and the Cote Gold Project resulted
in major outflows of cash. In line with the progress of suchlarge-scale projects, we carried out fund-raising throughmeans including foreign currency-denominated long-term
equipment funds, yen-denominated syndicated loans, andissuance of green bonds. As a result, our interest-bearing liabilities in FY2022 increased by ¥155.9 billion to ¥457.3 billion,
resulting in a D/E ratio of 0.28.1
1. Interest-bearing liabilities and D/E ratio do not include lease liabilities.

Cash Flow, D/E Ratio

R&D, Other 8.7

FY2023 Plan

52.0(¥ billions)
200

0.33
114.7

100

0.37
136.5
66.2

0.30 159.5
91.5
59.1

0

0.21

120.4 0.2

9.8

2018

¥198.0 billion
Smelting & Refining 58.6

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Increased production of cathode materials for automobile batteries (Besshi District +Harima Refinery): ¥25.7 billion (total: ¥47.0 billion) Development of the lower ore body in Hishikari Mine (installation of new dewatering
facilities): ¥0.2 billion (total: ¥3.7 billion) Fuel switch to LNG in Besshi District*: ¥0.6 billion (total: ¥1.9 billion)* Internal carbon pricing project

Return to Shareholders
-65.1

-0.2

2019

-185.5
2022

-0.4

2021

 Net Cash Provided by (used in) Operating Activities (left axis)
 Net Cash Provided by (used in) Investing Activities (left axis)
Free Cash Flows (left axis)  
D/E Ratio (right axis)

In our dividend policy, we decide on a balance of dividends
and internal reserves through comprehensive considerationof our business performance, our dividend payout ratio, thebusiness outlook, the soundness of our financial position, andother factors. As our financial strategy in the 2021 3-YearBusiness Plan, we will continue working to uphold the soundness of our financial position and will maintain a consolidated
equity ratio of 50% or higher, with a consolidated dividend
payout ratio of 35% or higher.
Under the above shareholder return policy, the annual dividend per share for FY2022 was ¥205, for a payout ratio of
35.1%.
2. The gain on sale associated with the transfer of all equity interest in the Sierra
Gorda copper mine recorded in FY2021 includes an amount equal to a reversal of theallowance for bad debt for loans and other receivables for Sierra Gorda S.C.M., which
was adjusted in the opening balance of retained earnings in FY2019 as a cumulative
effect (Revised IAS 28 “Investments in Associates and Joint Ventures”). For this reason,
effects on FY2021 results caused by the application of these accounting procedures
and manifesting in accordance with the transfer of equity are omitted from the dividend calculation. Basic earnings per share, excluding the effects of this application of
accounting procedures, were ¥857.47.

50

 ote Gold Project (initial interest): ¥32.8 billion (total: USD 846 million)
C
Cote Gold Project (additional interest): ¥20.5 billion (total: USD 274 million)
Total: ¥53.3billion (total: USD 1,120 million)

0

-70.3

2020



78.7

0.28

-142.4-200(FY)(As of May)

(times)
0.4

-32.4

-27.7
-100

169.3

Key Projects in FY2023 May Plan
MineralResources

Materials

Medium- to Long-Term Strategy for Value Creation

Funding

Dividend per Share, Payout Ratio
(¥)
400

300

35.4

35.1

30.0

35.1

35.1

2

301

(%)
40

30

205

200

20

121
100

0
(FY)

73

78

2018

2019

 Dividend per Share (left axis)  

10

2020

2021

2022

0

Payout Ratio (right axis)

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

51

Medium- to Long-Term Strategy for Value Creation

Strategy and Resource Allocation

Shareholder ValueThe Value Creation Logic TreeThrough means including the 4 Challenges in our current
2021 3-Year Business Plan, we have promoted growth strategies and strengthened our business base to maximize ourcorporate value. These actions also contribute to theenhancement of shareholder value. Our TSR, a common
index for evaluating shareholder value, exceeds the past performance of the TOPIX index (3 years/5 years/10 years). At thesame time, our PBR has recently remained under 1.0,
although we believe that this is largely due to characteristics
of our business. In addition to the disclosure of our profit/loss
excluding temporary factors,* we clearly indicate how ourcompany will growth by solidly executing on our strategy
and the competitive advantages that we possess. Doing so,
we will strengthen our capabilities for communicating information through IR activities so that investors can better
understand the value of our Company.
We believe that maintaining a firm financial base whilesteadily carrying out growth strategy aimed at achieving ourlong-term vision, based on the characteristics of our business,
will lead to positive valuation by the stock market in themedium to long term. Accordingly, we have set a shareholder
return policy linked to performance, with a dividend payout
ratio of 35% or higher in principle during the 2021 3-YearBusiness Plan. Recognizing that many shareholders are callingfor stable returns, we will undertake consideration of returns
in preparing the next 3-Year Business Plan.
We will continue working to enrich our financial and non-financial information disclosure aimed at eliminating asymmetry of information, and to enhance capital efficiency throughreduction of shareholders’ cost of capital under strengthened
sustainability initiatives, compression of inventories, and cost
reductions. Together with this, we will make efforts to incorporate valuable feedback received from investors into our management and further enhance shareholder value.

We believe that our corporate value is created from three values: shareholder value, social value, and environmental value.
This logic tree shows the relationship between these threevalues and the sources of value creation, concretely incorporating strategy and management targets into main measuresand diagramming the connections among them.
Shareholder value is created through increases in dividends and stock prices. While striving to maintain a stablefinancial base, our Company will execute growth strategies
that include business expansion and enhancement of profitability in order to grow shareholder value.

Acting under our corporate philosophy, which calls forco-existence with the global environment and society, social
contribution and fulfillment of responsibilities to our stakeholders through sound corporate activities, and respect for all
individuals, we will further strengthen our long-running sustainability initiatives. We will connect this to reduced management risks and thus lower cost of capital, as well as toenhanced adaptability to social and environmental changes
and to the creation and enhancement of social value andenvironmental value.

Logic Tree
KGIs

KPIs and Strategies
Grow net sales* Profit/loss after the exclusion of “impact of temporary gains/losses in a situation
where metal prices or foreign exchange fluctuate” and “impact of special factors forthe period concerned” from profit before tax(expand production andsales volume)

Increased dividends

Increased EPSDemand for the non-ferrous metals (copper, nickel, etc.) that we handle in our business is expected to continue growing steadily. However, as non-ferrous metal assets
become depleted through mining and must be constantly replaced, a battle for first-class assets is taking place, centered on major non-ferrous players.

In addition to the growing difficulty of developing new mineral resources at increasingly higher elevations and greater depths, the costs of materials, labor, and other
inputs have also increased in recent years.

Enhance the profit
marginShareholder
value

Increased stockpriceWe spend time to carefully consider participation in mineral resource development projects from various angles, but once the decision to participate is made, invest-

Reduced cost ofcapitalments on the scale of hundreds of billions of yen are quickly required.
Harvesting the fruits of investments requires years. Without a financial base able to withstand such time scales, we would be unable to continue our business and would
not be called upon as a candidate partner for mineral resource development.

Strengthened management resourcesAs non-ferrous metal prices are determined in trading markets typified by the London Metal Exchange (LME), profit and loss in the non-ferrous metals business is greatly
affected by the market environment. Accordingly, the volatility of our stock price is high, which leads to a higher cost of capital.

Sustained
expansion of
corporate
value

Share Price (Share prices calculated with share price at the end of March 31, 2013 set to 100)300
250

Provide appropriate
returns to shareholders
Have a stable financial base

Invest efficientlyE xplore acquisition of new overseasinterests
 Strengthen the value chain (strengthen
exploration for new nickel projects, etc.)with 3-business collaboration(Nickel-batteries) Promote development of products, newtechnologies, and processes that contributeto carbon neutrality Support digital transformation (DX)S trengthen safety initiatives
Reduce greenhouse gas (GHG) emissions Source minerals responsibly Implement human rights due diligence Enhance the effectiveness of the Board of
Directors Respond to stakeholders Strengthen innovation by promoting diversity and inclusion Have initiatives to secure, foster, and utilize
human resources Enhance employee engagement
 Foster and instill an open and vibrant organizational climate Shift Hishikari Mine to sustainability-oriented operation Properly manage tailing dams, closed
mines, etc.
 Enhance social trust and corporate
recognition

50

2014/3
TOPIX  

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3

TOPIX Nonferrous Metals

Social value

Investment period

SMM
TOPIX
TOPIX Nonferrous Metals

1 yearCumulative andAnnualized-14.7%
5.4%
1.5%

3 years
Cumulative
Annualized
155.9%
51.9%
81.0%

36.8%
15.0%
21.9%

5 years
Cumulative
Annualized
30.1%
28.6%
8.3%

5.4%
5.2%
1.6%

10 years
Cumulative
Annualized
130.1%
126.6%
82.5%

8.7%
8.5%
6.2%

Source: Bloomberg* TSR (Total Shareholder Return): Calculated using ([share price at the end of the fiscal year ended March 31, 2023] – [share price at the end of the fiscal year X years previous to the fiscal year ended March 31, 2023] + [total cash dividend per share for the relevant period]) ÷ [share price at the end of the fiscal year X years previous to the fiscal year ended March 31,2023].
* Annual cash dividend per share for TOPIX and TOPIX Nonferrous Metals: Calculated using the weighted average of the cash dividend per share value for each stock over the 12months previous to the base date and the formula used by TOPIX itself (Calculated using Bloomberg values).

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Protected naturalenvironment
Environmental
value

Strengthen sustainability
initiatives

Enhanced stakeholder satisfaction

Share Price Performance (TSR)52

 ave performance-linked dividends
H
Maintain a sound financial position able towithstand temporary large cash outflows



100

SMM  



Reduced management risks

150

0(year/month) 2013/3



Invest in intangible
assets200

P romote the Quebrada Blanca 2 ProjectPromote the Cote Gold Project Strengthen the competitiveness of the copper smelting and refining business Expand production capacity for battery
cathode materials Expand the Advanced Materials BusinessMedium- to Long-Term Strategy for Value Creation

Business Characteristics of Our Company (non-ferrous metals)

Main measures

Properly managed
mines

Enhanced ability toadapt to social andenvironmental
changes









Coordinated withclimate change ave proactive social
H
initiatives
 onsider theCenvironmentR espect humanrightsEvolve governance

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

53

Medium- to Long-Term Strategy for Value Creation

Aiming for mine development
and operation adapted to changes
in our society

Mineral Resources Business

Eiichi Fukuda
Executive Officer
General Manager ofMineral Resources Division

Segment Net Sales

Segment Income

Capital Expenditure(¥ billions)200(¥ billions)250(¥ millions)
100,000

200

150

Leveraging over 300 years of mine development and operational experience and technologies, we operate theHishikari Mine, Japan’s largest gold mine, with a focus on sustainability. We participate in the operation of overseas mines in which we hold interests to produce copper, gold, and other resources to provide materials and inorder to secure mineral resources. We are also working to acquire and develop new superior mines.

75,000Medium- to Long-Term Strategy for Value Creation

Review of FY2022

150
100

50,000
100

50

0
(FY)

25,000

50

2018

2019

2020

2021

2022

0
(FY)

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

Net sales figures do not include results from affiliatecompanies accounted for using the equity method.

Despite the significant depreciation of the yen, segment
income was lower than in the prior year for reasons including
a decline in copper prices, constraints on the shipment volume of gold associated with the transition to a sustainableproduction system at the Hishikari Mine, the lack of gain on
the sale of the Company’s entire interest in the Sierra Gorda
Copper Mine, and the lack of profit from the Sierra Gorda
Copper Mine accounted for using the equity method, the latter two having both been recorded in the previous fiscal year.

The SMM Group continued to make capital investments(¥1.9 billion) at the Hishikari Mine, primarily focusing on
the exploration of deep areas and digital transformation.
We also invested capital to support mining and production at overseas mines, including at the Cote Gold
Project (¥75.3 billion) and at the Morenci Copper Mine(¥13.2 billion).

Depreciation and Amortization Expense

Exploration Costs

Recoverable Gold Reserves at the Hishikari Mine(¥ millions)
20,000(¥ billions)
5(gold: tons)

2019

2020

2021

2022

167

163

159

157

155

Recoverable reserves of gold at the Hishikari Mine, calculated as of December 31, 2022, are 155 tons (down 2
tons from previous fiscal year).

3
10,000
2
5,000

0
(FY)

2018

Business Plan, we began loading ore into the main processing facilities and producing bulk copper concentrates inMarch 2023. However, the continued costs of necessary infection control measures in response to COVID-19, along withthe prolongation of the construction period due to the quarantining of construction workers and reduction of construction efficiency, have led us to initiate a review of construction
costs. At the Cote Gold Project (Canada), we moved ahead
with building construction, equipment installation, and otherconstruction work at the mineral processing area. At thesame time, the financial situation of our project partner,
IAMGOLD Corporation, deteriorated due to the increased
start-up costs. In response, we entered into an agreementwith IMG to provide additional funding to avoid concerns
over the progress of the project.

4

15,000

1

2018

2019

2020

2021

0
(FY)

2022

2018 2019 2020 2021 2022 2023

(forecast) New deposit exploration   Exploration around existing mines
Exploration expenditure is expected to increase to focus
on new exploration in Canada, including exploration
projects newly acquired at the end of 2022, and on
peripheral exploration in existing deposits with the aimof acquiring additional mineral resources.

54

0
(FY)

Although the COVID-19 pandemic subsided in FY2022 and its
influence waned compared to FY2021, it continued to exert
residual impacts on projects, including through increased
start-up costs and delays in construction plans. Despite someof the challenges caused by COVID-19, FY2022 marked thefirst year of the Hishikari Mine’s conversion to sustainability-oriented operations. We undertook cost reduction measures, a review of our operational structure, and promotion ofdigital transformation, including the test introduction ofself-driving heavy equipment. Production volume at ouroverseas operating mines slightly exceeded that of FY2021
due to year-on-year increases in mineral processing operating
rates at the Morenci Copper Mine (United States) and the
Cerro Verde Copper Mine (Peru). At the Quebrada Blanca 2
Project (Chile), one of the major projects in our 2021 3-Year

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Addressing Changes in the Business Environment and Issues
While the impacts of the COVID-19 pandemic gradually subsided worldwide in FY2022, a number of challenges in thebusiness environment remained. The capital investment
required to develop the Cote Gold project to productionswelled to about twice the estimate at the time of construction. The emergence of financial risk to our partner, IAMGOLD
Corporation, led our Company to provide additional funding
as noted above. Russia’s invasion of Ukraine in FY2021 continues without an end in sight, and prices of energy andmaterials continue to soar. These factors have had a strong
impact on our projects under construction and on thedomestic and foreign mines in which we hold interests,
resulting in increased costs. Accordingly, abatement of thesituation remains unclear, and numerous challenges including increases in capital expenditure, the cost of financing, andlabor costs due to inflation will likely continue to affect thecosts of mine development and operation. To address thesecircumstances, in addition to improving operating rates and

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

55

Medium- to Long-Term Strategy for Value Creation

Mineral Resources Businessother efforts to reduce finishing costs, we are converting
mines to the use of clean energy that is less susceptible tohigh crude oil prices and rises in coal prices. The transition toclean energy not only brings about structural changes interms of energy procurement, but is also important underrecent global demands for carbon neutrality.
In December 2022 in Peru, demonstrations broke out tooppose the dismissal and arrest of the former president andthe inauguration of a new administration, and to demand
dissolution of the Congress. The nationwide impacts of thisextended to the mining industry, with some copper mines
having to suspend operations. Our Company closely shared
information with our Peru office and with Freeport-McMoRan
Inc., our partner at the Cerro Verde Copper Mine, to assess thesituation and examine emergency measures. Fortunately,
there were no significant impacts on our related businesses
and we were able to maintain operations as usual. While thedisturbance has quieted, a similar situation could occur in the

future. We are closely monitoring the conditions as we gather
information from relevant parties.
In the area of resource nationalism, the mining royalties
that have been discussed for years in Chile are expected to beapproved by the Senate and the Chamber of Deputies, withlegislation going into effect during FY2023. The bill involves a
hybrid method that combines sales ad-valorem criteria andoperating profit criteria, imposing additional taxes based on
the annual copper production at mines. A movement also
exists to nationalize Chile’s lithium industry, which could
expand to other minerals as well.
Other mining industry-related risks seen worldwide
include acquisitions of mines by major resource players, thestrengthening of environmental regulations, and delays inproject approvals due to conflicts with local communities. We
are gathering information in cooperation with various stakeholders and are engaging in risk management so that we canrespond flexibly to such situations as they arise.

Despite some upward pressures on copper prices, including the easing of the lockdowns in China, expectations of arecovery in demand, and concerns over tight supplies, copper prices were weighed down by the ongoing interest rate
hikes by European and US central banks and concerns overeconomic slowdown under China’s stance of maintaining its
zero-COVID policy. The average copper price in FY2022 was
US$8,551/ton. With recovery of demand in China delayed
beyond original expectations and markets in Europe and theUnited States currently softening, there is a possibility ofdemand for copper decreasing. At the same time, long-term
uncertainty exists in terms of both supply and demand, forreasons including unclear demand after the transition toclean energy and expected delays in supply amid delayed

Progress and Strategy of the 2021 3-Year Business Plan
Advancement of the Quebrada Blanca 2 Project

FY2021

Cu Morenci Copper Mine

FY2022

FY2023

FY2024

 Expand concentrateleaching Resumption of operations at 50% of mills

Cu Cerro Verde Copper Mine

FY2025 and later Operational structure that can process 400 kt/day Operational structurethat can process 420
kt/dayCu Candelaria Copper MineCu Quebrada Blanca 2 Project March: start of production of bulk copper concentrates Continuing lower orebody development

Au Hishikari Mine Realization of sustainability-oriented operation (continuing from FY2023)

Au Cote Gold Project

Under the strong leadership of our partner Teck Resources
Limited (“Teck”), full-scale construction on the Quebrada
Blanca 2 Project began in January 2019 and made steadyprogress during the COVID-19 pandemic. In March 2023,
we began loading ore into the main processing facilities
and producing bulk copper concentrates. We plan tomove ahead with the ramp-up of facilities for full production and continue long-term stable production that will
extend beyond 20 years. From FY2023, we will dispatch
additional engineers from our Company and, working evermore closely with Teck, will move the project forward toachieve our production goal of 300,000 tons of copper per
year, one of the targets of our long-term vision. In 2022,
we also launched a feasibility study for a mineral processing plant expansion plan to increase ore processing volume by about 50%. This project is scheduled forcompletion in 2023.

Copper Production from Interests
Medium- to Long-Term Strategy for Value Creation

Progress and Plans for Our Top Priorities

launches of new copper mining projects. However, the copper price is expected to remain firm.
Gold prices declined temporarily in the middle of the
fiscal year for reasons including concerns over recession
and over interest rate hikes by the US Federal Reserve
Board. A slowing in the pace of interest rate hikes has
been observed since around November 2022, and thedollar rapidly weakened. This was the beginning ofincreased purchases of gold, which accelerated at the endof FY2022 due to financial instability spurred by reports ofbankruptcy at US banks and financial crises at a major
Swiss bank. The average gold price in FY2022 was
US$1,805/toz, remaining on par with the relatively highprice level of the previous year.

(kt)
300

200

100

0
(FY)

2020

2021

2022

2023

(plan)

 Morenci    Cerro Verde    Sierra Gorda   Candelaria    Ojos del Salado    Northparkes   Quebrada Blanca January-March: Start of production

Overview of the Quebrada Blanca 2 Project

Strategies for the Mineral Resources Business in the 2021 3-Year Business Plan

1. Promotion of the Quebrada Blanca 2 Project
2. Promotion of the Cote Gold Project

3. Hishikari Mine: Establishment of a foundation for
long-term stable operation

Equity interest

Teck 60%, SMM 25%,
Sumitomo Corporation 5%, Other 10%

Plannedinvestment

US$7.5 billion (100% of the project, includes
effects of inflation and the COVID-19 pandemic)

Average annual
copper production 240 kt
volume(As of July 31, 2023)

56

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Processing plant construction at the Quebrada Blanca 2 Project

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

57

Medium- to Long-Term Strategy for Value Creation

Mineral Resources Business

Advancement of the Cote Gold Project

Hishikari Mine: Establishment of a foundation for
long-term stable operation

This is a gold mine development project being advanced
together with Canadian gold producer IAMGOLD
Corporation (“IMG”), and its construction began in July
2020. In 2022, we carried out building construction andequipment installation work at the mineral processing
plant, tailing dam embankment construction, open pit
mining, and other work. Our operation of self-driving
trucks has made a steady start since January 2023, with the
project reaching a 79.8% progress rate as of the end of
March 2023. Aiming for the start of production between
January and March 2024, we plan to dispatch additional
engineers to important positions from FY2023 to advancethe project while maintaining a high level of engagement.
We further plan to leverage the project as an opportunity
for young engineers to gain experience. Exploration activities in the Gosselin zone, located about 1.5 km to thenortheast of the pit site, have confirmed extending gold
mineralization. We will continue drilling activities for raising the future value of the project and will analyze information such as the continuity and grade of the orebody.

Mineral processing plant construction at the Cote Gold Project (as of April 2023)* 80 meters below sea level

Hishikari Mine’s Gold Sales Volume
(t)
8

6

4

2

0
(FY)

2019

Results

2020

Results

2021

Results

Medium- to Long-Term Strategy for Value Creation

Since it started operations in 1985, the Hishikari Mine
(Kagoshima Prefecture) has produced approximately 264 tonsof gold as of the end of March 2023. Worldwide, the amountof gold contained in gold ore (grade) is said to be 3–5 grams
per ton. However, the Hishikari Mine is characterized by its
high grade with 20 grams of gold per ton, or about 5 times
the global average. The sales volume of gold in FY2022 was
4.4 tons. The sales volume planned for FY2023 is 4.0 tons. Asof the end of December 2022, the mine has recoverable
reserves of 155 tons. The Hishikari Mine has until now soldupward of 6 tons of gold per year, but that amount isdecreasing under our 2021 3-Year Business Plan. This is due tothe shift in the plan to sustainability-oriented operations
based on mining of average-grade recoverable gold. We are
additionally taking measures that include the review of ouroperational structure and the introduction of digital transformation, including self-driving heavy machinery. Construction
work on the -80ML* new hot spring water extraction room todraw hot spring water from inside the mine and lower thewater level, underway since 2012, has been partially completed, and mining of lower orebodies began in November

2022. This is expected to enable the mining of additional
gold. While we continue long-term operations to make theHishikari Mine a world-class mine that we can proudly show
to the world, we also aim to maintain the mine as a place forhuman resource development (our Mining School) where
resource engineers learn the technologies required for mining operation.

2022

Results

Overseas Mines and Staff Dispatched to Mines (As of May 22, 2023)

Total Copper Interests: Breakdown by Mine
Percentage of total FY2022 copper production by mine

Quebrada Blanca
Candelaria,
Ojos del Salado

11.5%

Northparkes

1.9%

1 management/
clerical employee
1 engineer
Interest

204,000 t
Cerro Verde

Sustainability Topics

Morenci Copper Mine

1.2%

Morenci

Cote Gold Project

25.0%

1 management/
clerical employee
9 engineers

49.1%

Interest

36.4%

36.72%

Cerro Verde Copper Mine
Interest

16.8%

Quebrada Blanca 2 Copper Mine ProjectNorthparkes Copper Mine
1 engineer
Interest

13.3%* Staff are also dispatched to joint-venture exploration projects and to research institutions.

58

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

5 engineers
Interest

25.0%

Candelaria
Copper Mine
Interest

Ojos del Salado Copper Mine
Interest

16.0%

16.0%

Achievement of Effectively Zero CO2 Emissions from
Electric Power at the Hishikari Mine

Quebrada Blanca 2 Project
Receipt of the FY2022 Chilean National Mining Society Award

From March 2023, we have switched to effectively all-renewable energy-derived electric power for purchased electricity
used at the Hishikari Mine. As a result, 98.7% of the electric
power used will be certified non-fossil fuel-derived electricity
provided by Kyushu Electric Power Company, Incorporated.
In conjunction with the 1.3% of electric power provided by
the solar power generation and binary power generationthat we had introduced by FY2022, we have achieved effectively zero CO2 emissions from electric power.
To achieve effectively zero CO2 emissions from the remaining non-electric power sources, we will continue our initiatives to conserve energy through operational improvements.
We will also take action to achieve effectively zero CO2 emissions from the Hishikari Mine by leveraging technologies andideas such as investigating decarbonization of diesel equipment and introducing negative emissions through means
such as tree planting.

The Quebrada Blanca 2 Project was awarded the 2022 Mining
Association Award by the Chilean mining industry association Sociedad Nacional de Minería (SONAMI). An organization
with over 70 mining companies in Chile as its members,
SONAMI selects and commends one company from a largescale mine every August.
The award for the Quebrada Blanca 2 Project recognizes
the project’s progress in construction amid the trials of the
COVID-19 pandemic and its contribution to the developmentof sustainable andresponsible mining.
Representatives of Chile,
including President
Gabriel Boric of the
Republic of Chile, also
participated in theaward ceremony.
Scene from the award ceremony

SUMITOMO METAL MINING CO., LTD.

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59

Medium- to Long-Term Strategy for Value Creation

Using our advanced technologicalcapabilities to provide a stablesupply of metal materials that
support society

Smelting & Refining Business

Masaru Takebayashi
Director, Senior Managing Executive Officer
General Manager of Non-Ferrous Metals Division

Segment Net Sales

Segment Income

Capital Expenditure(¥ billions)
1,200(¥ billions)120(¥ millions)
30,00090090For over 430 years since the start of our copper smelting and refining business in 1590, we have stably supplied avariety of metal materials to a wide range of industries. We engage in business on the strength of our advanced
smelting and refining technology, which was the first in the world to achieve the successful recovery of nickelfrom low-grade nickel oxide ore using the High Pressure Acid Leach (HPAL) process on a commercial basis.

20,00060

300

30

Review of FY2022

10,000

0
(FY)

2018

2019

2020

2021

0
(FY)

2022

Depreciation and Amortization Expense

2018

2019

2020

2021

2022

Production Volume of Nickel Sulfate(kt)
80(¥ millions)
30,000

60

0
(FY)

2018

2019

2020

2021

2022

TC/RC (benchmark)
($/t)
100

(¢/lb)
10

80

8

60

6

40

4

20

2

20,000In FY2022, we continued operations at business sites in Japanand overseas while taking measures to address COVID-19. In
addition to adjusted operational rates at some sites in
response to COVID-19, lower production due to troubles atfacilities and a decline in the grade of raw material, as well as
production adjustments to match changes in the businessenvironment, resulted in production volumes of major products falling below plans.
On the sales front, demand slumped as economic activity
was sluggish due to the COVID-19 pandemic in China.
Although there were signs of recovery in economic activity
from the second half of the fiscal year, we took measures suchas increasing export volume due to the delayed recovery of
demand in Japan.
In terms of securing nickel resources, we decided to discontinue the feasibility study for our Pomalaa Project in April
2022. However, we will continue to work toward the 3-business collaboration to strengthen the value chain and theMedium- to Long-Term Strategy for Value Creation

600

stable supply of products set out in the 2021 3-Year Business
Plan. In exploring new nickel projects, we accelerated the
exploration of projects at various stages, mainly in the Pacific
Rim region, and have narrowed them down to a few targets
and begun investigation. In addition, we have been developing a business utilizing existing intermediate materials in circulation, continuing to explore measures to secure ores forCoral Bay Nickel Corporation (CBNC) and Taganito HPAL
Nickel Corporation (THPAL), and working to commercialize
the battery recycling business.
In terms of enhancing the competitiveness of the copper-smelting business, in FY2022, we expanded concentrate
drying capacity at the Toyo Smelter & Refinery, in addition todeveloping various measures, including increasing productivity, cutting costs, and improving the recovery rate. We havealso been working on stable sales of the by-products produced by the Toyo Smelter & Refinery and enhancing ourcapabilities for dealing with impurities.

40
10,000
20

0
(FY)

2018

2019

2020

2021

2022

0
(FY)

2018 2019 2020 2021 2022 2023
(plan)

0(FY)

2016 2017 2018 2019 2020 2021 2022 2023

 TC (left axis)  

60

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

RC (right axis)0

Addressing Changes in the Business Environment and Issues
The supply-demand balance for non-ferrous metals is projected to ease temporarily for copper in the short term due tothe development of new and expanded copper mine projects. As for nickel, demand for nickel-based lithium-ion batteries for EVs is expected to grow. The supply-demandbalance for both copper and nickel is forecasted to starteasing due to more supply as increased production of nickel
pig iron continues in Indonesia. However, conflict between
China and the United States, the prolonged Russian invasionof Ukraine, inflation remaining high, continued monetary
tightening, and other factors mean that the outlook for the
global economy remains uncertain, and we will continue to

SUMITOMO METAL MINING CO., LTD.

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61

Medium- to Long-Term Strategy for Value Creation

Smelting & Refining Businessclosely watch future movements. Trends including decarbonization, clean energy, and the shift to electric vehicles are
expected to accelerate globally over the long term and provide a tailwind for non-ferrous metal demand. Against thisbackdrop, we expect non-ferrous metal prices in general toremain firm over the long term.
At the same time, soaring energy and material prices maylead to a downturn in revenue. Although energy prices
peaked during FY2022, they are still in the high range, andthe prices of some operation materials also remain high. To
achieve our planned production and sales volumes and maximize revenue despite these impacts, we will strengthen ourcompetitiveness through continued efforts to improve production efficiency and reduce costs, which are the basics for amanufacturing company.
In line with the growth of nickel demand for use in battery
materials, projects for the development of technology to process nickel pig iron into nickel sulfate and other products ofuse in battery materials, and new projects to turn thenickel-cobalt mixed hydroxide precipitate (MHP) used mainly
in battery materials into final products, are underway inIndonesia and elsewhere. Supply-demand remains tight for
nickel sulfate and briquettes, which can be used in battery
materials. However, the nickel business environment is
becoming increasingly volatile and uncertain as increased
production of nickel pig iron exceeds demand for use instainless steel, resulting in oversupply among other factors.
We will continue to closely watch future movements.
We also continued working to improve and streamline
operations through the promotion of digital transformation(DX). More specifically, in FY2022, we made infrastructure
environment improvements at business sites in Japan, suchas the introduction of Wi-Fi and the installation of local 5G.
We also decided to work on the themes of improving theoperating rate through predictive maintenance and supporting operations with future forecasts, and began considerationof using DX to respond to changes in the social environment
and increase our competitiveness.

Progress and Strategies of the 2021 3-Year Business Plan
Nickel Business 3-Business Collaboration toStrengthen the Value Chain

Medium- to Long-Term Strategy for Value Creation

The 2021 3-Year Business Plan set strengthening the value
chain in the Group’s nickel business as an important theme. The
Group’s nickel business develops low-grade nickel oxide orefrom mines, and we manufacture mixed sulfide (MS), an intermediate material, using HPAL technology at CBNC and THPAL in
the Philippines. The mixed sulfide is supplied to the Niihama
Nickel Refinery and the Harima Refinery, our business sites inJapan which manufacture nickel sulfate. This raw material isprocessed into cathode materials for batteries, primarily automotive batteries, and supplied to battery manufacturers. In
FY2022, CBNC and THPAL produced a total of 47,000 tons of MS,
which was supplied to the two business sites in Japan. The twobusiness sites in Japan produced a total of 77,000 tons of nickel
sulfate, providing a stable supply for use in battery materials.
With regard to strengthening the value chain on the raw
material side, we have implemented studies into the optimal
operating conditions to prepare for future changes in ore
composition at CBNC and THPAL as part of our ongoing

consideration of measures to secure nickel ore supplies forboth sites. We have also positioned the search for the next
nickel project as an important and urgent task, and we willcontinue to investigate and scrutinize projects. We will selectprojects that make the most of our strengths, including thedevelopment of projects utilizing the hydrometallurgicalrefining and pyrometallurgical smelting technologies wehave cultivated to date, in addition to HPAL technology.
At Hyuga Smelting Co., Ltd., we will make production
adjustments, including shutdown, in light of the current deterioration in the business environment for ferronickel. During
the shutdown period, we plan to reduce costs, update equipment, and takeaction on reducing
GHG emissions,putting in place thesystems to enable a
rapid response
once the businessenvironment
THPAL Plant
improves.

Progress and Plans for Our Top Priorities

FY2019FY2020

FY2021

FY2022

FY2023 and later

SMM Group Refineries and Their Main Products Implementation of  Discontinuation of Pomalaa Project
Pomalaa Project Strengthening of search for next project
DFS until FY2021

Ni Securing nickel resources

Ni Taganito HPAL Nickel Corporation

Toyo Smelter & Refinery

Niihama Nickel Refinery and Harima Refinery

Hyuga Smelting Co., Ltd.

Shisaka Smelting Co., Ltd.

Zinc oxide pellets

 Achievement of at least  Start of commercial production of chromite
30-kt production volume
 Start of commercial production of scandium oxide
Continuing measures to secure nickel ore supplies

Nickel sulfate
Ni Niihama Nickel Refinery andHarima Refinery

Electrolytic nickel

Electrolytic cobalt

Ferronickel shot

Gold ingots

Slag sandNickel sulfate

Nickel chloride

Green sandMaximum production and output to meet cathode material demand

1. 3-business collaboration to strengthen the value
chain for Ni-batteriesS earching for new nickel deposits
Securing the supply of ore for CBNC and THPAL Strengthening of the internal supply of raw materials in linewith increased production capacity for battery cathodematerials
 Study of new cobalt product development Promotion of battery recycling business

SUMITOMO METAL MINING CO., LTD.

Copper sulfate

 Achievement of record high production level (75.1 kt)

Strategies for the Smelting & Refining Business in the 2021 3-Year Business Plan

62

Electrolytic copper Achievement of new record high production level (79.1 kt)

Integrated Report 2023

Coral Bay Nickel Corporation, Taganito HPAL Nickel Corporation

2. Enhancement of competitive edge in the copper
smelting and refining businessS table operation of 450 kt of electrolytic copper productionand establishment of a 460 kt structure Strengthening of logistics infrastructureGold shot

Silver shot
MS (Mixed NickelCobalt Sulfides)

Scandium oxide

Chromite

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

63

Medium- to Long-Term Strategy for Value Creation

Smelting & Refining Business

Copper Business Meeting the Challenge of Improving

Core Business Sustainability
Another important theme under the 2021 3-Year Business Plan isenhancing our competitive edge in copper smelting and refining, which is the mainstay of our smelting and refining business.
The Toyo Smelter & Refinery’s annual electrolytic copper production volume is 450,000 tons. We are increasing this by another
10,000 tons to establish a structure capable of producing
460,000 tons by eliminating bottlenecks through facility modifications. In FY2022, we expanded concentrate drying capacity,
increasing concentrate processing volume. At the same time, asa measure to improve profitability, we reduced loss of valuable
metals from the slag produced by the Toyo Smelter & Refineryand also implemented initiatives to increase the recovery rate.
On the sales front, from the perspective of producing quality products that meet market needs, we worked on providing products that meet the demand for even higher quality
electrolytic copper and on stable sales of by-products. We

also undertook optimization of logistics and developed initiatives that will lead to enhancing competitiveness in terms of
the environment and costs through the promotion of modal
shift and other measures.
In FY2023, a long large-scale shutdown is scheduled dueto the first major repair of a smelting furnace in 12 years. We
plan to use this long shutdown to strengthen systems for stable production, improve production facilities, and increase
the operating rate. We will also use this period to invest in
reducing GHG emissions by converting the fuel used in a
number of facilities at the Toyo Smelter & Refinery to LNG.

pre-processing manufacturers in Japan is accepted by theCompany. We combine pyrometallurgical smelting andhydrometallurgical refining processes to recover copper,
nickel, and cobalt, which are then supplied to be used again
as raw materials for batteries. Moreover, in FY2022, throughjoint development with Kanto Denka Kogyo Co., Ltd., weestablished technology that recycles lithium from lithium-ion
secondary batteries (LIBs) as high-purity compounds and succeeded in developing a new process capable of horizontal
recycling of copper, nickel, cobalt, and lithium. During theterm of the 2024 3-Year Business Plan, we plan to establish asystem capable of processing 10,000 tons a year.

Toyo Smelter & Refinery

Battery Recycling Business Recycling Batteries

We are also working to commercialize the battery recycling
business. The recycling process involves the collection ofused batteries from the EVs and other vehicles that are on themarket, and the material (black mass) processed by

Sustainability Topics
CBNC and THPAL Win Four Awards from the Philippine
Department of Environment and Natural Resources

CBNC

1

Low-grade nickel
oxide ores

Nickel matte
Other raw materials

Nickel ore(nickel grade: approx. 2%)

Hyuga Smelting
Co., Ltd

Nickel mine
(New Caledonia)

THPAL2

Nickel chloride

Precursors

Batterymaterials

Battery materials, nickel powder

Electrolytic nickel(nickel grade: 99.99%)

Customers

PT Vale Indonesia,
othersPrecursors

Nickel sulfate(nickel grade: approx. 1%)

3(nickel grade:approx. 55–60%)

Niihama Nickel Refinery

Taganito Nickel MineMS

Isoura Plant

Rio Tuba Nickel Mine(nickel grade: approx. 1%)

Nickel sulfate

Sumiko Energy
Materials Co., Ltd.

Low-grade nickel
oxide ores

Harima RefineryWe maintain fully integrated supply chains covering from ores
through to metals and materials

Other chemical products

Ferronickel(nickel grade: approx. 15–20%)

CBNC received a total of three awards: the 2022
Presidential Mineral Industry Environmental Award (PMIEA),
first place in the Safest Mineral Processing – Extraction
Plant, and first place in the Best Mining Forest Contest,
Mineral Processing Plant Category, while THPAL placed second behind CBNC in the Best Mining Forest Contest,
Mineral Processing Plant Category, making a total of four
awards for the two companies.
PMIEA received by CBNC is the highest honor that can beawarded in the Philippine mining industry, and this is theeighth time CBNC has received the award. These awards
have been given to CBNC and THPAL in recognition of theircontinuing operations that give consideration to safety andthe environment.
Moving forward, CBNC and THPAL will continue to strive tooperate in a responsible manner by contributing to the surrounding area through building infrastructure for local communities, increasing employment, and sourcing materials
locally, as well as operating with the minimum environmental impact, preventing environmental accidents, restoring theecosystem through the greening of tailings dams carried out
by CBNC, and preserving biodiversity.

GHG Reduction Initiatives

Medium- to Long-Term Strategy for Value Creation

Supply Chains for Realizing a Stable Supply of Nickel

We are continuing our initiatives to reduce GHG emissions at
the business sites of the Non-Ferrous Metals Division. At business sites in Japan, we have converted the fuel for boilers at
the Niihama Nickel Refinery to LNG, converted the fuel forvarious facilities at the Toyo Smelter & Refinery to LNG, andswitched to renewable energy for purchased electricity at theHarima Refinery. For our overseas business sites, we are conducting biomass co-firing tests in boilers at CBNC. We willcontinue working on an even wider range of measures toreduce GHG emissions.
In addition, as part of the SMM Green Metal concept, an
initiative to offer low-carbon products, we have begun
considering the possibility of offering green metal for ourelectrolytic copper using the mass-balance method to
respond to the growing need for low-carbon products inthe future. We aim to complete certification work by athird-party organization by the end of FY2023 for electrolytic copper. Following that, we also plan to roll out the initiative to electrolytic nickel.

1. Coral Bay Nickel Corporation (CBNC): Shareholders: Sumitomo Metal Mining Co., Ltd. (84.375%); Nickel Asia Corporation (15.625%). Head Office: Rio Tuba, Bataraza, Palawan Province,
Philippines.
2. Taganito HPAL Nickel Corporation (THPAL): Shareholders: Sumitomo Metal Mining Co., Ltd. (75%); Mitsui & Co., Ltd. (15%); Nickel Asia Corporation (10%). Head Office: Taganito,
Surigao del Norte Province, Philippines.
3. PT Vale Indonesia Tbk: Shareholders: Vale Canada Limited (44.3%); Sumitomo Metal Mining Co., Ltd. (15%); others (40.7%).

Presentation of trophies at the awards ceremonies (Left: CBNC; Right: THPAL)64

SUMITOMO METAL MINING CO., LTD.

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Integrated Report 2023

65

Medium- to Long-Term Strategy for Value Creation

Technological Changes at the Toyo Smelter & Refinery

Change in Concentrate Processing Volume(Tons/day)
4,500

Starting in 2017, we were first in Japan to achieve the recovery of copper and nickel from used lithium-ion batteries for reuse as resources. The resource recycling process combines the Toyo Smelter & Refinery’s pyrometallurgical smelting process and the Niihama Nickel Refinery’s hydrometallurgical refining process to recover copper aselectrolytic copper and nickel as nickel sulfate from collected used batteries. The nickel sulfate is processed into
cathode materials for secondary batteries at the Isoura Plant in a groundbreaking initiative that realizes fully circular “battery to battery” recycling. In 2022, we completed development of technology to recover cobalt and lithiumin addition to copper and nickel. We aim to establish part of this battery recycling process at the Toyo Smelter &Refinery in the near future.

FY

History

1971

Began operations

1985

Began processing Hishikari gold ore (pulverization at old Hoshigoe
flotation plant)

1991

Completed 30,000 ton berth

2002

Obtained ISO 14001 certification

2003

Installed rotary steam dryer for concentrate
Completed new sulfuric acid plant (two lines)

2004

Began No.2 tank house operation (Blocks A to D, 300 tanks)
Began operation of new precious metals refining plantObtained ISO 9001 certification

2006

Established new flotation plant

2008

Obtained new JIS certification for slag aggregate for concrete

2016

Achieved electrolytic copper production volume of 450,000 tons/
year (451,472 tons)

2017

Began processing used lithium-ion battery scrap

2022

Obtained ISO 45001 certification

Medium- to Long-Term Strategy for Value Creation

The Toyo Smelter & Refinery began operations in 1971, carrying on the copper business that formed the foundation of Sumitomo’s business development. The Toyo Smelter & Refinery has the world’s largest production capacity of electrolytic copper for a smelter and refinery with a single flash furnace. Producing 447,000 tons a year in
FY2022, it has been a top runner in the industry for over 50 years, especially on the environmental front.
Since beginning operations, the Toyo Smelter & Refinery has made numerous innovations. In particular, in theprocessing of copper concentrate, the main raw material which forms the indicator for operations, the Toyo
Smelter & Refinery has increased the treated copper concentrate rate, which was 757 tons a day when operations
first began, to approximately 3,700 tons a day (annual average) at present, a five-fold increase, through innovations that include oxygen enrichment into the reaction air, the development of the Sumitomo-type single concentrate burner, additional converter installation, and using two lines for the sulfuric acid process. This is theworld’s highest volume of concentrate melted for a single flash furnace, and energy efficiency per unit of production is also the highest in the world. In addition, the Toyo Smelter & Refinery has actively pursued the recovery ofvaluable metals from recycled raw materials including copper scrap, copper sludge (secondary materials containing copper), and e-scrap (scrap circuit boards from electronic equipment), and approximately one quarter of electrolytic copper production derives from these raw materials
The Toyo Smelter & Refinery has worked with other businesses in the Group to maximize the Company’s value.
Since 1985, it has been processing gold ore from the Hishikari Mine, Japan’s only commercial gold mine, to produce gold. At the same time, it uses the silicon dioxide contained in the gold ore to reduce the amount of silica
flux required for copper smelting, thus successfully smelting gold and reducing operation materials simultaneously. These precious metals, including gold and other platinum group metals, are commercialized at the world’s
first completely hydrometallurgical precious metals refining plant, which began operating in 2004.

Installed additional fugitive gas treatment plant
Installed additional cryogenic oxygen generator plant

4,000

Installed additional cryogenic oxygen generator plant
Expanded into two sulfuric acid lines

3,500

Installed additional PSA oxygen generator plant

3,000

Installed Sumitomo-type single concentrate burner
2,500

Installed additional PSA oxygen generator plant

2,000

Installed new PSA oxygen generator plant

1,500

Installed new cryogenic
oxygen generator plant

1,000
500
0
(FY) 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Initial firing ceremony at Toyo Smelter & Refinery (1971) with then President Kawakami

66

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67Medium- to Long-Term Strategy for Value Creation

Battery Materials BusinessContributing to society throughthe development and supply of highly
advanced materials by making effective
use of non-ferrous metal resources

Materials Business

Katsuya Tanaka
Managing Executive Officer
General Manager of Battery Materials Division

Segment Net Sales

Segment Income

Depreciation and Amortization Expense(¥ billions)400(¥ billions)30(¥ millions)
12,000Through the manufacturing of cathode materials and resource recycling for automobile batteries, we will reducegreenhouse gas (GHG) emissions and contribute to the achievement of a sustainable society, while maintaining aworldwide leading share in nickel-based cathode materials.

10,000300
20Review of FY2022

8,000
6,000

10

4,000

100
2,000
0
(FY)

2018

2019

2020

2021

2022

0
(FY)

2018

2019

2020

2021

2022

0
(FY)

2018

2019

2020

2021

2022

Capital Expenditure

Growth of Cathode Materials
Production Capacity and Future Plans

Market Scale of SiC power devices
Yole Forecast(¥ billions)20(t/month)
15,000($ millions/year)
5,000

Changes of Business Environment and Response to Issues

10,0003,000
Forecast also
revised upward

10
2,000
5,000
5

1,000

2018

2019

2020

2021

2022

0
(FY)

2013 2014 20152018 2019 2020 2021 2022

2025 2027 2030

(forecast)

0(Year)

Forecast for 2022 result is 90%
higher than estimation in 20202019 2020 2021 2022 2023 2024 2025 2026 2027

Source: Power SiC report, Yole intelligence, 2022
2016 Report  
2018 Report  
2020 Report  

68

Europe, and 8% in the U.S., with China surpassing Europe.
Under these circumstances, we made efforts to achieve stable production and sales of cathode materials. However, thetight supply of semiconductors and other materials, increases
in the costs of energy and logistics, and growing anxiety over
the world economy due to the Russian invasion of Ukraine
resulted in reduced production and stagnation at some automobile manufacturers. Sales volume of our cathode materials
also struggled. While pushing ahead with the 2,000 tons/
month expansion of production capacity that was decided in
FY2021, we received a transfer of the lithium iron phosphate(LFP) battery material business of Sumitomo Osaka Cement
Co., Ltd. in May 2022.

4,000

15

0
(FY)

Worldwide passenger car sales in 2022 were 82 million units.
While this represented a decline from the previous year in
most countries and regions with the exception of China andIndia, worldwide sales of new passenger electric vehicles(EVs), with battery electric vehicles (BEVs) and plug-in hybrid
electric vehicles (PHEVs) combined, exceeded 10 million units
per year for the first time in 2022 to reach 10.2 million units,
an increase of 55% from the previous year. Sales by region
were 5.9 million units in China, an increase of 80% year on
year; 2.6 million units in Europe, an increase of 15%; and990,000 units in the U.S., an increase of 55%. China accounted
for nearly 60% of global EV sales. The percentage of EVs
among new car sales in 2022 was 29% in China, 21% in

Medium- to Long-Term Strategy for Value Creation

200

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

2017 Report  
2019 Report  
2022 Report

According to estimates by the International Energy Agency(IEA), global sales of electrified vehicles (xEVs) will hit a record
again in 2023, increasing 35% from 2022 to reach 14 million
units, nearly a fifth of the automobile market overall. The IEA
predicts that worldwide sales will reach 20.5 million units by2025 (accounting for over 20% of all new car sales, includinginternal combustion engine vehicles) and will exceed 36.9
million units (35% of all new car sales) in 2030. In line with thisexpansion of the xEV market, the U.S. and Europe, both ofwhich have large automobile markets, are constructing sustainable storage battery supply chains domestically andregionally through the introduction of regulations and tax

incentives. In the U.S., the Inflation Reduction Act (IRA) thatcame into effect in August 2022 introduced incentives for the
production of EVs and components in North America, alongwith tax credits for EV buyers. With the release of some detailsof the Act in March 2023, Japan and the U.S. signed theJapan-U.S. Critical Minerals Agreement (CMA). The release offurther details on the application of the Act is ongoing. In
addition to such trends in countries’ policies, the market outlook remains unclear due to factors including shortages ofnickel, lithium, and other minerals for EVs, soaring prices associated with shortages, and the advance of battery technology. At the same time, the xEV market continues to expand as

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69

Medium- to Long-Term Strategy for Value Creation

Materials Business
Advanced Materials Business
CO2 emission regulations are tightened worldwide, anddemand for automobile secondary batteries and components for EVs is expected to steadily increase. Seeking to
expand our battery materials business, we will continue

studying the situation so that we can make appropriately-timed investment decisions concerning the establishmentof next-phase plants for further production expansion.

Progress and Strategies of the 2021 3-Year Business Plan

Shuichi Ogasawara

achieve the 2021 3-Year Business Plan announced earlier, we
will also work to achieve a cathode material production volume of 10,000 tons per month by FY2027 and build production capacity of 15,000 tons per month by the end of the 2027
3-Year Business Plan period (FY2028 to 2030). To maintain aleading position in market share of nickel-based cathodematerials, we will examine product expansions and plant sites
aimed at meeting the demands of the market. We will also
work to develop the LFP business that was transferred to us
from Sumitomo Osaka Cement Co., Ltd. in May 2022.

Our plan for the expansion of production capacity by 2,000
tons per month, which will incorporate the construction of
the new plant at Niihama decided in 2022, calls for completion of buildings in 2023 followed by installation of machinery.
We are making steady progress toward completion of theplan in 2025, with staffing progressing steadily as well. The ¥47
billion total cost of the expansion is eligible for grants from
the Ministry of Economy, Trade and Industry. The beginning ofoperations under the expansion will increase our cathodematerial production capacity from the current level of approximately 5,000 tons per month to 7,000 tons per month. To

Aiming to be the lead runner inthe market by adapting quickly totechnological innovation andchanging needs
Managing Executive Officer
General Manager of Advanced Materials Division

We develop and produce highly advanced materials used in wide-ranging fields including automobiles, energy,
environment, communications and information, and home appliances, along with products that contribute tocarbon neutrality.

Review of FY2022

Speeding up Development of Lithium Iron Phosphate (LFP) Battery Materials
The adoption of LFP battery materials in electric vehicles andstationary storage batteries is expected to lead to expansionof demand and the creation of new markets. We are currently
working on stable production and sales to address the customers earlier supplied by Sumitomo Osaka Cement Co., Ltd.,and have begun studying the conversion of existing processes to reduce costs. Looking ahead, we will work to maintain our mass production technology for high-quality LFP
while advancing research and development and examining
and responding to new customers’ needs.

SMM Products in Daily Life
1

1

10

1

In FY2022, the production of smartphones and personal computers declined significantly due to soaring prices of raw
materials associated with inflation originating in lockdowns in
China, along with a global economic slowdown and adjustments of inventory accumulated in response to the COVID-19
pandemic. Demand for electronic components stagnatedconsiderably. From the fall of 2022 onward, slowdown
became clear in data center-related areas and semiconductor
manufacturing equipment, which had driven demand forcomponents. The electronic components market overall
entered negative growth.
Under this harsh market environment, we reviewed our
production plans in the Advanced Materials Business in lightof greatly-changed demand trends, and adapted wherever
possible to avoid situations such as accumulation of inven-

Medium- to Long-Term Strategy for Value Creation

Sustainability Topics

tory that would lead to deterioration of profitability.
With some exceptions, our efforts under measures toachieve our vision for the Advanced Materials Business in thefirst year of the 2021 3-Year Business Plan did not progress far.
However, we made definite advances in the development of
new products and new applications. X-MINING®, our information site aimed at the development of new applications andcreation of value for existing powder material products, has
focused on activities to capture projects that will lead tofuture sales, including strengthening and streamlining our
web marketing system, and increasing the number of leads(prospective customers). We are also exhibiting at international exhibitions in Japan and overseas to uncover the needsof customers and markets.

4
Lithium nickel oxide cathNickel hydroxide cathodes Materials for rare earth bonded
odes for secondary batteries for secondary batteriesmagnets for automobile motors

2

3

3

Lubricants5

Copper polyimide substrate
for the driver ICs of LCD TVs

7

4

5

6

Autoclaved lightweight
concrete

Optical isolators for fiber
optic systems

SAW filter LT/LN for
smartphones

7

8

8

9

10

Nickel powder and nickel paste
for multilayer ceramic capacitors

Automotive catalysts

Oil refining catalysts

61Functional inks (Near-Infrared Printed wiring boards
absorbing materials)

70

SUMITOMO METAL MINING CO., LTD.

Changes of Business Environment and Response to Issues

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Integrated Report 2023

8

In 2020, remote work became widespread under the global
expansion of the COVID-19 pandemic, creating demand forPCs, TVs, game consoles, and other at-home products. Under
the acceleration of the digitalization of society, including fullscale sales of 5G smartphones and the ongoing electrificationof vehicles, sales growth of advanced materials products
exceeded the growth of the electronic components market
in FY2020 and 2021. However, the world economy slowed in
2022 due to inflation, the Ukraine crisis, and lockdowns in
China. The business environment for advanced materials

products deteriorated significantly, with rapid inventory
adjustment phases taking place especially in the Chinese andTaiwanese markets.
Trade friction between the United States and China also
worsened. The U.S. strengthened export regulations inadvanced fields, China promoted domestic production, andcompetition in the Chinese market between Chinese local
manufacturers and Japanese manufacturers intensified.
However, although China has implemented some raw material export restrictions, we make the assumption that this will

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

71Medium- to Long-Term Strategy for Value Creation

Materials Businessnot lead to comprehensive import restrictions or to the exclusion of foreign capital in global supply chains.
In response to these Chinese risks, our Company will advancemeasures that include expanding sales to customers outside
China, collaboration with Chinese materials manufacturers, andinvestment in differentiated products as we strive to securemaximum profits. In response to China’s export restrictions on
raw materials, we will create a list of raw materials that are highly
dependent on China, and will undertake measures including
procurement from outside China, buildup of inventory, andsearch for alternate raw materials, while avoiding the occurrenceof opportunity loss caused by a reduced production volume.

Sustainability Topics

Progress and Strategies of the 2021 3-Year Business Plan
Our vision for the Advanced
Materials BusinessBe the lead runner in the markets for our products, continue to refine our material technology
capabilities to meet the needs of every era, and secure high profitability and top-class market shareprecise verification of product quality demanded by customers,
we established a new product development department in
FY2023 and are working to reinforce our customer response
capabilities. For our near-infrared absorbing material CWO®, westrengthened relationships with the development teams ofmajor customers. The product has been adopted for use in glass
roofs, which have proliferated mainly in EVs, and sales haveincreased alongside window films. In silicon carbide (SiC), we
established a new 8-inch bonded SiC substrate development
line to meet customers’ needs for larger diameters. We aim to
produce 10,000 (6-inch equivalent) pieces per month in 2025.

Thermal Management Using CWO® Near-Infrared Absorbing Material

SiC is a power semiconductor material used mainly inelectric power control applications. Its use is expanding asa material capable of reducing energy loss in high-capacity fields (high current and high withstand voltage)
demanded for drive control devices, particularly in hybrid
vehicles and electric vehicles.
Our unique bonding technology achieves low resistanceand high strength while maintaining the characteristics ofa monocrystalline SiC. In addition to our current 6-inch
line, we are working tobuild a new 8-inch
development line thatwill allow us to meetcustomers’ requests forlarge-diameter substrates at an early stage. SiCkrest® bonded silicon carbide (SiC)

Our near-infrared absorbing material is an inorganic material thatfeatures outstanding weather resistance, selectively absorbing
near-infrared energy while allowing the sun’s visible light to passthrough. Taking advantage of unique material properties thatconvert absorbed near-infrared rays into heat, we are developing
new and diverse applications. These include window materials
that provide both transparency and heat shielding, clothing
made from textile woven with the material to yield heat-generating and non-transparency effects, and agricultural greenhouseheat shielding curtains that suppress excessive temperature rise.
Our near-infraredabsorbing material
aids in the reduction of GHG emissions as a productthat contributes toComparative depiction of heat distribution in rega low-carbon
ular clothing (left) and clothing made with CWO®
society.
(right), after exposure to sunlight for 10 minutes

substrate

Progress and Plans on Our Top Priorities in the Materials Business
FY2021

Battery materials

Our roadmap concept
2020
Social/Market Trends

2025

2030

Crystal materials

FY2023

 SiC launch for consumer markets

FY2024FY2025 and later 7,000 t/month cathode Increase in production ofmaterial production by FY2025
cathode materials to 10 kt/(NCA + NMC2 + nickel hydroxide) month by FY2027
 SiC launch for automotive markets

1. NCA: An acronym for a type of secondary battery cathode material composed primarily of N (nickel), C(cobalt), and A (aluminum).
2. NMC: An acronym for a type of secondary battery cathode material composed primarily of N (nickel), M(manganese), and C (cobalt).

Market Needs
Individual Market/Customer Needs I

Customer Needs

FY2022 Completion of 4,550 t/  NCA1: Increase in production tomonth production
4,850 t/month from mid-2022
structure

Social Trends

MarketMedium- to Long-Term Strategy for Value Creation

In order to bring about the vision set out for our Advanced
Materials Business in the 2021 3-Year Business Plan, in FY2022
we made efforts toward the development of products and newtechnologies that will contribute to carbon neutrality andtoward an expansion strategy for the Advanced Materials
Business, in line with our roadmap. With respect to nickel powder, we have been able to enter the advanced domain of multilayer ceramic capacitors (MLCCs) by advancing
hydrometallurgical processing technology to obtain smaller
and more uniform particle sizes. As a result, our products havebeen adopted by several companies. To meet the speed andCommercialization of Silicon Carbide (SiC) Substrates

Strategies for the Materials Business in the 2021 3-Year Business Plan
Individual Market/Customer Needs II

Market Size
Core Competences

SMM

Policy/Strategy
Expected Functions

Products

Products (1)(Existing Products)
Products (2)(New Businesses/New
Products)
Individual Key Technologies

Technology

Technology A(New Businesses/New
Products)

Technology B
Technology C(Insufficient Fundamental
Technologies)

Issues/Risks

72

Products (3)SUMITOMO METAL MINING CO., LTD.

Constant review of issues and risks in order to achieve our vision

Integrated Report 2023

Achievementof our vision

Battery Materials Business

Advanced Materials Business

Increase in battery material (cathode) production capacity

1. Introduction of roadmap-based management

2,000 t/month expansion• Building completion planned for 2023, to be followed byequipment installation. Steady progress toward finalizationin 2025.
• Aggressive introduction of DX at the new plant in Niihama,realization of production optimization and labor savings Studying next capacity expansion: Looking into productexpansions and plant sites in line with customers’ requests
 Steady progress in the securing of human resources for business expansion
 Reducing GHG throughout the battery life cycle: Participationin the first phase of GX League (FY2023-FY2025). The pilot
facility for new processes in the production of next-generation cathode materials is eligible for subsidies from the
Ministry of Economy, Trade and Industry’s Green InnovationFund.
 apture changes and needs from a top-down view of medium- toClong-term market trends Predict the future Think about how we can respond to change and shape our business Seek a shared understanding of strategies and measures that theAdvanced Materials Division should pursue in the medium tolong term

2. E xpansion strategy for the advanced materials businessE stablishment of a 10,000 wafers/month (converted to 6 inches)mass production structure for silicon carbide (SiC) in FY2025
 Expansion of sales of Ni powders (for use in paste for MLCCs) in
high-end markets
 Expansion of sales of CWO® (near-infrared absorbing materials) for
window film applications and exploration of new markets
 Establishment of a manufacturing and sales structure that captures market growth in communication devices


SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

73Medium- to Long-Term Strategy for Value Creation

Research & Development
Strengthening development of new
products for the sustainable growthof the Group

Progress of the 2021 3-Year Business Plan and Research and Development Strategy
Future Research and Development Strategy

Hideyuki Okamoto
Executive Officer
General Manager of Technology Division

The SMM Group has four research and development sites and we are engaged in raising our competitiveness by
evolving existing technologies while also advancing research and development into next-generation metalsmelting and refining technologies and pioneering new materials for carbon neutrality.

Review of FY2022 and Progress of the 2021 3-Year Business Plan
reducing direct CO2 emissions, and we obtained the resultsfor proceeding to scale-up testing.
In the area of creating new businesses to support the value
chain of the 3-business collaboration in Mineral Resources,
Smelting and Refining, and Materials, our work on the development and demonstration of the storage battery recycling
process and the development and demonstration ofhigh-performance cathode materials for next-generation
storage batteries has been adopted as a part of the Nextgeneration Storage Battery and Motor Development project
under the Green Innovation Fund of the New Energy andIndustrial Technology Development Organization (NEDO),
and we accelerated development toward commercialization.

Research and Development Expenses

Ratio of intellectual property
rights held, by businessResearch and Development by the SMM Group
Development of Mineral
Resources and Metal Processes
Core Technology

Materials Development

Mutual separation of Ni and Co salts
through solvent extraction

Cathode materials forlithium-ion secondary
batteries

Smelting and refining
process technology

Ratio of intellectual property
rights held, by region

Aqueous cobalt
solution

Smelting andrefining process
technology(¥ billions)10

Number of intellectual
property rights held

Domestic: 3,320
Overseas: 2,308

6Core Technology

Powder synthesis andSurface treatment
technology

Basic Research

Aqueous nickel
solution

Powder synthesis
and surface
treatment
technology

Fundamental Technology

8

Exploration,mining, and mineralprocessing technology

Analysis Technology
Fundamental Technology

Computer aided
engineering andAnalysis technology

Nickel powder for
multilayer ceramic
capacitors (MLCCs)

Powder material
basic research

Crystal growthand processing
technology
Basic Research4 Mineral Resources
1.3%
 Smelting and Refining
29.9%
 Materials
63.0% Administration(engineering, analysis, etc.) 5.8%

2

0
(FY)

74

Medium- to Long-Term Strategy for Value Creation

To achieve the Vision for 2030, the 2021 3-Year Business Plan
set out (1) promotion of development of new technologies
and processes to achieve carbon neutrality; (2) business innovation in manufacturing and R&D divisions through DX(Digital Transformation); and (3) activation of individuals andutilization of human resources, and we are pursuing researchand development in these areas.
The Group’s business consists of processes that produce
significant direct and indirect emissions of greenhouse gases(GHGs), such as CO2. As such, in FY2022, we worked to reduceuse of neutralizers in existing smelting and refining processes,
fix CO2, and develop next-generation processes for smelting
and refining without using fossil fuels with the aim of

In the materials field, we will continue to develop high functionality and new products for battery materials, powdermaterials, and crystal materials. In the field of battery cathodematerials, regarded as a growth market, alongside development to improve performance, we will develop next-generation battery materials, including solid-state batteries, and newprocesses that will help to improve productivity.
Under the Vision Co-Creation Partnership with Tohoku
University aimed at creating innovative materials in thelead-up to 2050, we established the Tohoku University GXMaterials Science Co-Creation Research Center on October 1,
2022 in partnership with the Tohoku University Advanced
Institute for Materials Research to accelerate exploration of
R&D themes. Through the exploration of R&D themes at the
research center, we will develop young engineers. We will
also focus on the development of photocatalyst materials foruse in artificial photosynthesis for CO2 recycling andhydrogen production and materials related to energy-saving
and energy harvesting with the aim of realizing carbon
neutrality.
In formulating the Vision for 2030, we discussed how wewill create materials without damaging the global environment in the world of 2050 or 2100 and what the non-ferrous
metals industry should be like in order to achieve this goal. In
terms of the medium-term outlook, we will be closely watching how the world changes and transforms by 2030, and wewill work to respond rapidly in step with this change andtransformation and make effective use of non-ferrous metal
resources. In terms of concrete initiatives in the smelting andrefining field, we are pursuing research and development
related to next-generation nickel smelting and refining processes and lithium refining processes to significantly reduce
GHG emissions. We are also exploring R&D themes that solve
the social needs presented in the Vision for 2030 while continuing to develop improvements in resource exploration,mining, and mineral processing technologies.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

 Japan59.0%
 Asia19.7%
 North America
9.7%
 Europe
8.3%
 Oceania
2.5% Central and South America,
Middle East, Africa
0.8%

Powder material basic
research

Core Technology

Exploration, mining,and mineral processing technology

Core Technology
Morenci Copper Mine

Single-crystal lithium tantalate

Crystal growth andProcessing technology

SUMITOMO METAL MINING CO., LTD.

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75

Medium- to Long-Term Strategy for Value Creation

Research & Development

Our Challenges under the 2021 3-Year Business Plan
Extraction of Lithium
Lithium compounds are essential raw materials for the production of lithium-ion secondary batteries, which contributeto carbon neutrality. The extraction process of lithium fromlithium-containing salt lakes and ores normally results in large
volumes of GHG emitted in the process of separating impurities. We developed an adsorbent that is able to selectively
extract only lithium with almost no GHGs emissions in the
impurity separation process. We will confirm the reliability ofthe process and collect the information required for its industrialization in order tomake this process areality.

The lithium-rich lake Salar de Atacama(Photographed by an SMM employee)

Development of Cathode Materials for Solid-State Batteries
We are working on the development and demonstration ofhigh-performance cathode materials for next-generation
storage batteries, which has been adopted as a part of the
Next-generation Storage Battery and Motor Development
project under the Green Innovation (GI) Fund of the New
Energy and Industrial Technology Development Organization(NEDO). Through the further deployment of our cathodematerial products for storage batteries under this project, we
will perform the development and demonstration of GHG
emission reduction processes and high-performance cathodematerials that will enable the practical use of solid state andother high-performance lithium-ion secondary batteries.
In addition, to strengthen R&D infrastructure, we havemade the decision to introduce pilot equipment and build astructure to house this equipment (Battery ResearchLaboratories No. 2 Development Building). Construction work
is expected to be completed in December 2025. The pilot
equipment for new processes is eligible for GI Fund projectsubsidies, and we will steadily implement the project planwith the installation of the equipment.

Developing Fe-Ga Magnetostrictive Alloy Single Crystal
In the area of energy harvesting materials that harvest and convert
a variety of minute amounts of energy around us into electricity,
we are developing Fe-Ga magnetostrictive alloy single crystal. It
converts mechanical vibration energy into electrical energy andfunctions as a power source that does not need recharging or an
independent sensor that does not need batteries. In October
2022, we exhibited the Fe-Ga magnetostrictive alloy single crystal
under development at K2022, an international trade fair held in
Dusseldorf, Germany, presenting it as an advanced material thatwill contribute to realizing a decarbonized society. We will develop
applications in parallel with the development of the material.

Industry-Academia Collaboration with Tohoku University
in the Non-Ferrous Metal Smelting and Refining Field
In April 2023, the Company and the Institute of Multidisciplinary
Research for Advanced Materials, Tohoku University establishedthe Joint Research Department in the Non-ferrous Metal Smelting
and Refining Environmental Science Research Department for asecond term. Following on from its first term, the Joint Research
Department will continue to deepen its collaboration with
non-ferrous metal smelting and refining companies in Japan andprovide support for the continuation and expansion of university
courses in non-ferrous metal smelting and refining while aiming
to contribute to the development and recruitment of engineers.

As automobiles undergo what is expected to be a rapid and long-term shift to electric drive and battery capacity
becomes increasingly higher, demand is growing for the copper, nickel, cobalt, and lithium used in lithium-ion secondary batteries (LIBs) for electric vehicles, leading to calls for effective resource recycling.
Since 2017, we have been working to recover and reuse the copper and nickel contained in LIBs through a process that combines the Toyo Smelter & Refinery’s copper smelting and refining processes and the Niihama Nickel
Refinery’s nickel smelting and refining processes. The recovered nickel, in particular, is processed into a secondary
battery cathode material at the Isoura Plant, realizing Japan’s first “battery to battery” horizontal recycling usingmaterials recovered from used LIBs.
In addition to this, we have been promoting LIB recycling research and development and demonstrated in 2021
that cobalt, for which resource depletion is a concern, can also be recovered, purified to a high level, and reused asa raw material for LIB cathode materials. Moreover, through joint development with Kanto Denka Kogyo Co., Ltd.,we established technology that recycles lithium from slag containing lithium into high-purity compounds in 2022,
successfully developing a new process for horizontal recycling of copper, nickel, cobalt, and lithium.
In evaluations of battery performance by battery user Primearth EV Energy Co., Ltd., it was demonstrated on the
product level that the performance of batteries using LIB cathode materials manufactured through this process isequal to that of batteries manufactured from conventional raw materials, primarily derived from natural resources.
We are currently studying the commercialization of battery recycling with the aim of establishing a system forprocessing 10,000 tons per year during the term of the 2024 3-Year Business Plan (FY2025–2027). In parallel with
this, we are also working to develop technology for reducing CO2 emissions from the perspective of carbon neutrality. If this new process makes it possible to reuse valuable metals as resources on a commercial basis, it can be
expected to make a further contribution to resource recycling to combat global resource depletion.
Looking ahead, we will continue to actively work on “battery to battery” horizontal recycling and will contribute to the formation of a sustainable circular society and the strengthening of resource recycling to combat global resource depletion.

Medium- to Long-Term Strategy for Value Creation

Sustainability Topics

Battery Recycling

Recycling Flow
Pre-Processing
Manufacturers

Used Secondary
Batteries(pre-processed*)* Pre-processing: Heat treatment to eliminate toxins,crushing, and selection

Intermediates frombattery manufacturing

SMM’s
SecondaryBattery
Recycling
Process
Battery
Manufacturers

Kanto Denka Kogyo’s
High-Purity Lithium
Recycling Process

Pyrometallurgical
Smelting Process

Slag

Hydrometallurgical
Refining Process

CopperLithium
Hydrometallurgical
Refining Process

Nickel-Cobalt Mixture

Cathode materials forlithium-ion secondary
batteries

Battery Materials
Manufacturing Process

High-Purity
Lithium Compounds

Motors, Wire harnesses, etc.

Fe-Ga magnetostrictive alloy single crystal and wafers

76

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

From left: Masami Terauchi, Director of the Institute of Multidisciplinary Research for
Advanced Materials, Tohoku University; Shuichi Ogasawara, General Manager ofTechnology Division at Sumitomo Metal Mining Co., Ltd.; and Takuro Ueda, Executive
Vice President of Tohoku University (Positions are as of when the photograph was taken.)

Electrolytic Solution
Manufacturers

SUMITOMO METAL MINING CO., LTD.

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77

Medium- to Long-term Strategy for Value Creation

Digital Transformation (DX) at the SMM GroupSpecial Feature 1

In FY2022, the SMM Group established a policy on management issues to be solved through DX, a long-term DX
roadmap, and the priority areas. The planning and implementation of DX measures in each area is led by eachdivision for business areas and the Digital Transformation Department for Group-wide work areas.

In the area related to the digitalization of each business among the priority areas for DX, the Mineral Resources Business and theNon-Ferrous Metals Business began development of the communications infrastructure environment to serve as a base and promoted the introduction of digitalization that will translate into increases in production efficiency. Moreover, in terms of initiatives forenhancement of employees’ data literacy and training of human resources for DX, which are part of the roadmap, we beganenhancing the digital literacy of all employees, which forms the basis for promoting DX as a whole.

Specific Issues and Responses
Business reform and creation of new businesses

Four business areas (including R&D)

• Utilize DX in business reform and development of new products and processes, andaccelerate the speed of these in order to respond flexibly to changes in the social
environment that will become ever more intense.
• Create new businesses by leveraging digital technology and discovering new value tofurther strengthen the SMM Group’s competitive advantage.

Human resource response in an age with a declining
birthrate

Developmentof DX

Related

Improvement of management efficiency• Use data to make speedy management decisions.
• Carry out operational streamlining and enhancement oflabor productivity to improve competitiveness in all
fields of business.
• Build a foundation for high-speed networks, cloud utilization, IoT, and other elements which are indispensable
for a DX foundation.
• Respond to ever-changing and growing information
security threats.

Roadmap and Progress2021 3-Year Business PlanI mprovement of management
efficiency
 Business reform and creationof new businesses




2022

2023

2024

2024 3-Year Business Plan
2025

2026

2027

Promotion of data collection and utilization

Utilization in management decisions

Application of DX to model plants and business sites

Group-wide deployment of DX

Group-wide DX foundation development

Expansion and functional
enhancement of DX foundation

Strengthening of information security

 uman resource response in an
H
Achievement of diverse work styles
age with a declining birthrate  Enhancement of employees’ data literacy
Transformation of corporate climate and culture• Employees
Training of human resources for DX• DX human resources

Coordination with 3-YearBusiness Plans

DX foundation development

Deployment of DX

2027 3-Year Business Plan
2028

Maximize mine life
Achieve low-cost operation

MineralResources DX

Batteries DX

S ave labor through automation of manufacturing processes, and improve remote monitoring and quality control Create factories that operate without relying
on humans and reduce manufacturing costsT ransition to a management framework thatis compatible with a declining birthrateImprove productivity through AI and processdata analytics

Non-Ferrous
Metals DX

Materials
Business andR&D DXE stablish a development and manufacturing
framework capable of promptly commercializing
market (customer) demands and market trends

Main Initiatives in FY2022
Examples of Initiatives in the SMM Group CASE-1 and 2
Mineral Resources DX
At the Hishikari Mine (Kagoshima Prefecture), with the aim of extending the life of the mine, we began initiatives to reduce costs byintroducing automated load-haul-dump (LHD) and reviewing the operating system by adopting digital technology in mining work.
Moreover, at closed mines, we established communications networks at each site and introduced remote monitoring and control.
Non-Ferrous Metals DX
We developed on-site communications infrastructure at our main plants, and completed the installation of on-site Wi-Fi at someplants. We are using mobile terminals that utilize this infrastructure to improve the efficiency of maintenance and inspection work.
In addition, we implemented verification of automated particle sizing for refined products using AI, as well as planning and preparing for the installation of plant operation support and equipment fault prediction systems.

2029

Three Group-wide work areas
New businesscreation
Shift in businessmodelS ignificantly reduce logistics costs andoptimize the supply chain by thoroughly
streamlining logistics (pursuing efficiency ininventory and transportation) through theuse of digital technology

Business reform

Business transformation through DX Improvement of management

efficiency
 Business reform and creation of

new businesses Human resource response in an age

with a declining birthrate

78

SUMITOMO METAL MINING CO., LTD.

FY2022 Progress Began consideration of the IoT platform
concept Considered plants to be models for Smart
Factory and approached candidate plants
about participating in the initiative Considered issues related to visualizationof logistics and formulated response policy using DX

Plan for FY2023

 Continued mid-career recruitment of
human resources for DX Commenced digital literacy improvement
activities for all employees Formulation of SMM’s ideal humanresources for DX and training plan Company-wide expansion of digital literacy activities

Integrated Report 2023

 Commencement of IoT platform design
and performance of implementation
testing Creation of roadmap for development ofmodels for Smart Factory and commencement of proof of concept (PoC) at plants
selected to be models

Logistics DX

Reform of Indirect
Operations andWork Styles

E nhance labor productivity throughcontinual improvement of operations
Work styles to suit any chosen place of work
Creative work, enhanced customer contact
 shift to new business models

Equipment DX (Operation) Reduce operator burden throughpursuit of automation (Maintenance) Improve ease of maintenance

Progress
Plan for FY2022

Medium- to Long-Term Strategy for Value Creation• Enable business continuity and development amid adeclining birthrate by promoting automation andunmanned operations at manufacturing sites, and drastically streamlining indirect operations.
• Become a company that is attractive to workers throughthe creation of safe workplaces and achieve diverse work
styles that consider work-life balance.

2021

Priority Areas and Main Initiatives

Main Initiatives in FY2022
Examples of Initiatives in the SMM Group CASE-3 and 4
Reform of Indirect Operations and Work Styles
With the objective of addressing the issue of human resources in an age with a declining birthrate, we began company-wide digital
literacy enhancement activities to train human resources who will improve their own work using digital technology. We havedefined literacy levels and formulated training goals with a training curriculum for each level. We began training with the first intakeof 30 trainees selected through open applications at Head Office.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

79Medium- to Long-term Strategy for Value Creation

Special Feature 1

Digital Transformation (DX) at the SMM Group

Examples of Initiatives in the SMM Group1

CASE -

MineralResources DX

Strengthening the Business Foundation and DX(Hishikari Mine)

2

CASE -

MineralResources DX

SUMITOMO METAL MINING CO., LTD.

* Gangue: Rocks, minerals, and soil with no economic value that is transported out ofa mine.

Integrated Report 2023

In company-wide training for human resources who will
improve their own work using digital tools, we have defined
three types of digital human resources. These three types are
the digital leader who drives DX across divisions within the
Company, the digital core, who improves work using digital
tools with a focus on his or her own division and own work,and the digital user, who can use new digital tools without
resistance.
We define the digital literacy required by the digital core,
which is the main type of the three, as knowledge, mindset,
and skills. We have designed a curriculum that combines
Off-JT and OJT consisting of SMM’s unique e-learning content
for knowledge, group training using group work for mindset,
and hands-on training that involves actually using digital
tools for skills, with trainees finally using digital tools toimprove operations in actual work.
In FY2022, there were open applications for digital corehuman resources at Head Office, and approximately 30 trainees took part and worked on improving operations using
digital tools.

We will roll out digital literacy education company-widewith the goal of training 150 digital core human resources in
FY2023. In addition, we plan to select candidates to be digitalleaders from among the trained digital core human resources
and provide them with support that enables them to plan
new digitalization themes in FY2024.

Group work during education on mindset

Control system

Managing Closed Mines and DX(Yaso Office, Akakura Neutralization Plant)

At closed mines, we improve the quality of wastewater containing harmful substances to a level that meets wastewater standards before releasing it. Mine wastewater treatment operations
must be managed 24 hours a day, 365 days a year. Many closed
mines are located in remote and depopulated areas, and wemust respond quickly if there are any abnormalities. When accessto a site is difficult due to heavy rain or snow, not only does ittake time to get to the site, but the workers themselves are also
exposed to danger while traveling and working. In addition, thequality of the mine wastewater varies significantly depending on
the season and the weather, and management often depends
on the intuition of workers based on their experience.
In order to resolve these problems, we are proactively promoting the introduction of IoT at the neutralizing processing plants ofclosed mines. As the majority of closed mines are located indepopulated areas without mobile phone signals, we first completed the installation of optical cables and other communications networks at all the locations, and we are now introducing
remote monitoring and control using mobile terminals. Enabling
the remote monitoring and operation of water treatment facilities
using a smartphone makes it possible to access detailed information at the office or even at home. In addition, it also helps to80

the experience and skill of workers. By digitalizing the drillingdesign to standardize the optimum blast, we aim to extract
only the ore without gangue* being mixed in with it. This willlead to increased productivity and reduced costs. Besides thisinitiative, we are using DX to connect our heavy equipment
and underground environment management facilities to a
network to optimize operations by collecting, analyzing, andutilizing data.
We will continue to move forward with DX, working
toward long-term stable operations, and extending the minelife at the Hishikari Mine.

Reform of Indirect
Operations and Work Styles Digital Literacy Education for Employees

Medium- to Long-Term Strategy for Value Creation

At the Hishikari Mine (Kagoshima Prefecture), we are promoting DX as one of our primary initiatives to achieve sustainability-oriented operations.
Two of the advantages that can be obtained through DX
are an improvement of safety and improvement in the working environment through automation and remote operation.
At the Hishikari Mine, we began testing the introduction of
automated load-haul-dump (LHD) in FY2022 with the goal of
having one worker outside the mine to operate multiple
LHDs in the future. Eliminating the need to have operators forthe heavy equipment inside the mine will significantly
improve the working environment by eliminating the humanburden of the work involved in transporting ore, including
the harsh environment unique to working in mines, which
are dusty and hot, and the vibration of heavy equipment
associated with ore haulage operations.
In addition, with regards to increasing productivity andreducing costs, which were the original objectives for the
introduction of DX, we have been moving forward with thedigitalization of mining work. For example, the results of
blasting to extract ore from bedrock can vary depending on

3

CASE -

improve the efficiency and quality of work, including immediate
identification of the situation in the event of an abnormality andthe provision of a system to prevent human error. This system wasintroduced at the Yaso Office of the Akakura Neutralization Plant
in 2021. Workers have said that there has been a decrease in thenumber of on-site responses in response to abnormalities outsideof business hours and that they are able to work with peace ofmind due to knowing what the status is in advance. We also plan
to use remote operation as an emergency measure when a sitecannot be physically accessed due to a natural disaster. We willcontinue to implement IoT at each site based on the results fromthe introduction of the system at the Akakura Neutralization Plant.

4

CASE -

Reform of Indirect
Digital Technology Utilization Community
Operations and Work Styles

We have established a digital technology utilization community for publication of work improvements using digital technology, ideas, and know-how, to enable employees to use
the information as a reference in improving their own work as
well as providing colleagues with support and assistancewith digital technology.
The community has initiated measures that include (1) disseminating information on internal and external study groups
and workshops to provide opportunities for learning new
skills; (2) organizing events such as internal talk sessions toconnect digital core human resources and disseminate information internally; and (3) establishing a chat channel todeepen interaction among digital core human resources.
In FY2023, we will introduce a communication system that
all community members will be able to use and build a community in which employees transmit information themselves,use it as a reference, and provide cross-organizational support for each other. We will also consider measures toincrease motivation in order to firmly establish activities toimprove work through the utilization of digital technology.

Internal talk session

Remote monitoring at a mine wastewater processing facility

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

81Medium- to Long-Term Strategy for Value Creation

Sustainability Management at the Sumitomo Metal Mining Group

Sumitomo Metal Mining Group Sustainability Policy

Sustainability promotion framework
Decision-Making and Supervision

The SMM Group will tackle management issues that contribute to society’s sustainable
development, and will strive to achieve continuous growth in our business and improve
our corporate value.

Board of Directors

Business Execution

President

Sustainability Committee
7 Sustainability
Subcommittees

Sustainability Promotion Structure
Our Group advances sustainability activities primarily throughour Sustainability Committee. Since setting out our Vision for2020 in 2008, we have consistently undertaken solutions tosocial issues through our business. In April 2022, wereorganized our sustainability promotion structure with theaim of engaging in management and sustainability withgreater consistency.

Sustainability Committee

Corporate Value Enhancement
Strategic Committee

Risk Management Working
Group

Group for Becoming the World Leader
in the Non-Ferrous Metal Industry
Company-wide Group on
Human Resources

Efficient Resource Utilization
Subcommittee
Environmental Preservation
Subcommittee
Corporate Citizenship
Subcommittee

Compliance Working Group
Quality Assurance Working
Group“Responsible Mineral
Sourcing” Working Group

Diversity Subcommittee

Deputy Chair

Executive Officer in charge of sustainability (executive officer in charge of the Corporate Planning
Department)

Members*

General Managers of Divisions, General Managers of Administration Departments, General Manager of theTechnology Division, General Manager of the Planning & Administration Department of the Technology
Division, General Manager of the Engineering Division, General Manager of the Facilities Technology
Department of the Engineering Division, heads of operational divisions in the Head Office

Our 7 Sustainability Subcommittees manage progress toward
Vision for 2030 and engage in sustainability activities integrated with our businesses.

Number of times
convened

Two or more times per year (five times in FY2022)

Content ofdeliberations

Chair
Executive officer in charge of the Technology Division

Environmental Preservation Subcommittee
Corporate Citizenship Subcommittee
Diversity Subcommittee
Human Rights Subcommittee
Occupational Health & Safety Subcommittee








Deliberation on revision or abolition of material issues, Vision for 2030, and the Sustainability Policy eliberation and decision-making concerning important items related to annual plans and other sustainDability promotion activities, and indicators for evaluating our level of achievement toward Vision for 2030
 egular evaluation of sustainability promotion activities reflecting issues and opinions obtained throughR
engagement with stakeholders, and invoking of corrective measures rovision of information on sustainability promotion activities, exchanges of information, explanation ofP
key measures, sharing of awareness, and setting of important themes related to sustainability activities

In FY2022, the committee deliberated on progress toward Vision for 2030, standards for achievement andaction plans for 2030, revision of the Sumitomo Metal Mining Group Policy on Human Rights, and establishment of the SMM Group Digital Transformation (DX) Vision. The committee shared information on opinions
and issues identified through engagement with stakeholders, grievance mechanisms, internal audits, andother means, and reflected this information in our sustainability activities. In particular, the committee
made revisions to the Sumitomo Metal Mining Group Policy on Human Rights to reflect the opinions andrequests of diverse stakeholders.
Board ofDirectors

Subcommittee
Efficient Resource Utilization SubcommitteeI nternal control and supervisory functions related to sustainability activities Deliberation, decision-making, and approval concerning sustainability activities, progress reports, evaluation of performance, review of activity plans for the following fiscal year, etc.
In FY2022, the Board of Directors deliberated and resolved matters including establishment of the SMM
Group DX Vision and revision of the Sumitomo Metal Mining Group Policy on Human Rights.


SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Communications Subcommittee

Deputy Chair
Senior Deputy General Manager of the Technology
Division

Executive officer in charge of the Safety & Environment
Executive officer in charge of the Technology Division
Control Department
General Manager of the General Affairs Department——
General Manager of the Human Resources Department—
General Manager of the Sustainability Department
Executive officer in charge of the Safety & Environment
General Manager of the Human Resources Department
Control Department
General Manager of the Public Relations & Investor—
Relations Department

Medium- to Long-Term Strategy for Value Creation

7 Sustainability Subcommittees

Sustainability Department and Corporate Planning Department

Carbon Neutrality
Committee

Human Rights
Subcommittee
Occupational Health &Safety Subcommittee
Communications
Subcommittee

President

Secretariat

Digital Transformation
Committee“Shikinen Kaikaku” Group

Chair* The Chairman of the Board, outside directors, and Audit & Supervisory Board members attend as observers

82

4 Management Systems
Working Groups

Secretariat
Technology Division
Safety & Environment Control Department
General Affairs Department
Human Resources Department
Sustainability Department
Safety & Environment Control Department
Public Relations & Investor Relations Department

4 Management Systems Working Groups
The Risk Management Working Group, Compliance Working
Group, Quality Assurance Working Group, and “Responsible
Mineral Sourcing” Working Group play roles in operating ourGroup’s key management systems across organizations andWorking Group

Chair

Deputy Chair

Risk Management
Working Group

Executive officer in charge of
the Corporate Planning
Department

Executive officer in charge of
the Safety & Environmental
Control Department

Compliance Working
Group
Quality Assurance
Working Group

Executive officer in charge ofGeneral Manager of the Legal
the Legal Department
Department
General Manager of the—
Quality Assurance Department“Responsible Mineral
General Manager of the NonSourcing” Working
Ferrous Metals Division
Group

General Manager of the
Sustainability Department

Secretariat
Corporate Planning
Department, Safety &Environmental Control
Department

in strengthening our management foundations. Each working group formulates policies in line with its theme and conducts checks of progress toward achieving its activity plans.

Members
General managers of divisions, General Manager of the Technology Division, General Manager ofthe Engineering Division, heads of operational divisions in the Head Office

General managers of divisions, General Manager of the Technology Division, General Manager ofthe Engineering Division, heads of operational divisions in the Head Office
General managers of divisions, General Manager of the Technology Division, General Manager of
Quality Assurance Department
the Engineering Division, heads of operational divisions in the Head Office
Mineral Resources Division: General Manager of the Division, General Manager of the
Administration Department
Administration Department,
Non-Ferrous Metals Division: General Manager of the Administration Department, General Manager
Non-Ferrous Metals Divisionof the Nickel Sales & Raw Materials Department, General Manager of the Copper & Precious Metals
Raw Materials Department, General Manager of the Copper & Precious Metals Sales Department

Legal Department

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

83Medium- to Long-Term Strategy for Value Creation

Sustainability Management at the Sumitomo Metal Mining Group

Corporate Value Enhancement Strategic Committee
We have established the Corporate Value Enhancement
Strategic Committee to grow the SMM Group’s business sustainably and enhance our corporate value. To further ensure
the achievement of this objective, we have established the
Chair

Carbon Neutrality Committee
Group for Realizing the World Leader in the Non-Ferrous
Metal Industry, the Company-wide Group on Human
Resources, and the “Shikinen Kaikaku” Group as subordinate
organizations.

Executive officer in charge of the Corporate Planning Department

This committee was established in April 2022 to set a clear
policy and path toward achievement of the carbon neutralitythat our Group should pursue, and to quickly and powerfully
move forward in this pursuit.

The basic principle is that each business division, and eachorganization related to carbon neutrality, should work
together with the aim of having all parties involved actively
engage in activities.

Chair

Executive officer in charge of Carbon Neutrality Promotion (Executive officer in charge of the Technology Division)

Deputy Chair

Executive officer in charge of Safety & Environment Control Department

Deputy Chair

General Manager of the Corporate Planning Department

Members

Members

General managers, senior deputy general managers of divisions, General Manager of the Technology Division, General
Manager of the Engineering Division, General Manager of the Legal Department, General Manager of the Human
Resources Department, General Manager of the Finance & Accounting Department

General managers of divisions, General Manager of the Technology Division, General Manager of the Engineering Division,
General Manager of the Safety & Environment Control Department, General Manager of the Corporate Planning
Department, General Manager of the Sustainability Department, General Manager of the Finance & Accounting Department

Secretariat

Planning & Administration Department of the Technology Division

Number of times
convened

Two or more times per year (six times in FY2022)

Secretariat
Number of times
convenedContent ofdeliberations

Corporate Planning Department

Content ofdeliberations

Two or more times per year (two times in FY2022)
 eliberation on candidates for new large-scale projects
DSelection of “seeding” projects as candidates for new large-scale projects
 Reporting on the progress of large-scale projects, from the “planting” stage to the “harvesting” stage Instruction to the Group for Realizing the World Leader in the Non-Ferrous Metal Industry, the Company-wide Group on
Human Resources, and the “Shikinen Kaikaku” Group regarding examination of matters specified as issues rafting of company-wide policy, goals, and roadmap for the achievement of carbon neutrality, and deliberation onDmaterial issues
 Deliberation and decision-making on fiscal year plans and other key matters related to carbon neutrality promotion activities Regular evaluation of carbon neutrality promotion activities, review of goals, and invocation of corrective measures Provision of information on carbon neutrality promotion, exchanges of information, explanation of key measures, andsharing of awareness Deliberation and decision-making on other key issues related to carbon neutrality promotion activities
Medium- to Long-Term Strategy for Value Creation

Putting Sustainability Promotion Activities into Practice
Digital Transformation Committee
The committee was established in April 2021 to clarify the
future vision of Digital Transformation (DX) that our Group

Chair

Executive officer in charge of Digital Transformation (Executive officer in charge of the Technology Division)

Deputy Chair

General Manager of the Digital Transformation Department

Members

General managers of divisions, executive officers in charge of corporate divisions, Executive officer in charge of the Safety& Environment Control Department, Executive officer in charge of the Quality Assurance Department, General Managerof the Technology Division, General Manager of the Engineering Division, General Manager of the Corporate Planning
Department, General Manager of the Human Resources Department, General Manager of the Information Systems
Department

Secretariat

Digital Transformation Department

Number of times
convened

Two or more times per year (three times in FY2022)

Content ofdeliberations

84

should aim for and to maximize the contribution to management through Group-wide promotion of DX.

 rafting of DX promotion policy and deliberation on material issues
DDeliberation and decision-making on fiscal year plans for DX promotion activities and other key matters Regular evaluation of DX promotion activities and invoking of corrective measures Provision of information on DX promotion, exchanges of information, explanation of key measures, and sharing ofawareness O ther key issues related to DX promotion activities


SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

The 7 Sustainability Subcommittees manage and advancethe progress of our sustainability promotion activities, with
the Sustainability Committee at the center. However, responsibility for putting activities into practice is assigned acrossdifferent levels through job classification-based management.
In conjunction with our 2021 3-Year Business Plan, the subcommittees also formulated plans for organizations in areas
related to Vision for 2030 during the period of the 3-YearBusiness Plan, and are managing the progress of these plans.
The 7 subcommittees assess details of organizations’ activities
through the subcommittees’ members or secretariats, andcheck progress through the Sustainability Committee.
Through dialogue with shareholders and investors andthrough briefing videos for business partners, we explain ourGroup’s sustainability promotion activities to outside stakeholders and call for their cooperation.

Diffusion of Sustainability Promotion Activities
For Vision for 2030 and other sustainability promotion activities, we distribute simple, illustrated booklets with specificexamples of activities to all Group employees, and post interviews and columns on specific activities in our in-house bulletins and on our portal site. We also conduct education onsustainability in annual training (new employee training,
mid-career hire training, grade-specific training, selective
training, etc.). In addition to regular training, in FY2022 weheld “Reorganization of Sustainability Promotion Structure”
briefings for managers and young employees in every district.
In conjunction with the adoption of the Sustainable
Development Goals (SDGs) by the United Nations General

Assembly in September 2015, we have also set every
September as a month for thinking about the Sumitomo
Metal Mining Group’s Vision for 2030. As a part of this, wehold the Sumitomo Metal Mining Group Vision for 2030
Awards every year as a rule. These awards recognize individuals and groups for their contributions to achieving Vision for2030. In FY2022, a total of seven awards were given, with one
individual award and six group awards (115 people in total).
We also engage in awareness activities such as communicating messages from top management and conveying ourprogress toward Vision for 2030 to employees in a concise
manner.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

85

Medium- to Long-Term Strategy for Value Creation

Vision for 2030, Material Issues, KPIs (Indicators and Goals)* See the Sustainability Report 2023 for details on the results and forecast for indicators and goals,
https://www.smm.co.jp/en/sustainability/library/sustainability_report/

1 Effective Use of Non-Ferrous Metal Resources
Vision for 2030

A company that generates resources through high technological capabilities
1. A company that stably provides non-ferrous metals to society
2. A company that contributes to society by effectively using impurities through collaborative, open technological development among industry, academia, and government
3. A company that contributes to the construction and maintenance of recycling systems for non-ferrous metals
4. A company that develops and supplies highly advanced materials that contribute to the resolution of social issues

KPI Indicators

Goals

1. 1) A dvance copper mine projects• Strengthen production structure at JV mines to achieve and maintain copper production levels of 300 kt/year frominterests• Achieve steady copper production level by reinforcing exploration of surrounding and deep areas in JV mines, expanding
mineral processing technology, and improving operations leveraging IoT and AI• Advance Phase 2 and later projects at the Quebrada Blanca Copper Mine

2) Acquire new superior copper and gold resources• Develop new mines for which we have operatorship3) Improve productivity by introducing newtechnology• Promote remote operation and unmanned operation of heavy machinery and information infrastructure equipment
inside and outside of the Hishikari Mine

4) Advance nickel ore projects and improve
productivity(1) Nickel production: 150 kt/year(2) Recovery rate compared to FY2018: +2%(3) Recovery of scandia by-product(4) Recovery of chromite by-product2. 1) Develop technology to separate, stabilize andbleed off impurities, and create value from impurities generated by smelting processes and mines• Developtechnology to stabilize and bleed off impurities: Develop and demonstrate the process2) Develop technology to create value from unused
non-ferrous metal resources• Contribute to existing (e.g. marine resource development) and new development projects

3) R ecover non-ferrous metals from hard-to-process
resources• Participate in business and technology for recovery of lithium from salt-lake water in the presence of high levels of
impurities• Demonstrate, commercialize, and expand scale of recycling technology that recovers cobalt from automotive lithium-ion
batteries
Commence commissioning and commercial operation of pre-commercial plant: FY2026*

4. 1) Leverage our strengths to create new products
and new businesses that contribute to society• Research, develop, and commercialize new advanced materials in the fields of energy, automobiles, and information
communications2) Hold raw materials in-house for favorable andstable procurement• Commercialize NiO for fuel cells following demonstration project3) Expand sales of low-cost battery cathode materials through favorable, stable procurement of ourown nickel raw materials• Maintain top class global share in the expanding cathode materials market

2 Climate Change
Vision for 2030

A company that actively undertakes climate change countermeasures, by reducing emissions and stably supplying
products contributing to a low-carbon society, a future with zero greenhouse gases (GHGs)

KPI Indicators

Goals

Reduce GHG emissions

1. C ontinuing to grow our business while maintaining GHG emissions below the level of FY2013. Accelerating actions toachieve net zero GHG emissions by 2050 or sooner.
2. C ut GHG emissions intensity by at least 26% compared to FY2013
3. E xpand contribution of GHG reduction by products contributing to a low-carbon society: 600 kt-CO2 or more

3 Significant Environmental Accidents   4 Biodiversity
Vision for 2030

A company that values water resources and biodiversity, and protects the richness of the sea and land

KPI Indicators

Goals

1. Z ero significant environmental accidents

1) Promote improvements through the use of risk management and environmental management systems2) Reinforce and improve equipment and infrastructure to address increases in sources of natural hazard

2. Reduce emissions of hazardous substances(year-on-year)1) Optimize water use; reduce emissions of hazardous substances to the atmosphere and water2) Promote various environmental preservation and biodiversity preservation activities, such as regular reforestation

5 Employees’ Occupational Health and Safety
Vision for 2030

A company where all employees work together with safety first the priority in a comfortable working environment aswell as safe facilities and operations

KPI Indicators

Goals

1. P revent occupational accidents

Serious accidents: zero (in Japan and overseas, including contractors)
All accidents: reduce year-on-year, with aim of eventually reaching zero

2. Prevent occurrence of occupational diseases

Number of workplaces that present higher health risks: reduce year-on-year
Occurrence of occupational diseases: zero

6 Diverse Human Resources   7 Development and Participation of Human Resources
Vision for 2030

A company where all employees can take a vibrant and active part
1. A company that respects the humanity of each and every employee, and where employees feel pride, motivation, and joy in work
2. A company that provides each and every employee with opportunities to improve his/her capabilities, and grows together with employees

KPI Indicators

Goals

1. Promote working style reform and create workplaces 1) Improve scores for “Management by managers and superiors,”“Appeal of job,” and “Work environment” in employeethat make use of digital technology, enablingawareness survey
diverse human resources to play vibrant and active2) (1) Number of female managers: 50 (SMM non-consolidated)
roles(2) Ratio of female employees: 20% or higher (SMM non-consolidated)3) Expand number of managerial track employees of foreign nationality
4) Percentage of employees with disabilities: 3% or higher (SMM non-consolidated)5) Assign jobs and provide support matched to employees’ life stages
2. Support employees’ mental and physical health1) Reduce the number of employees taking long-term leave2) Percentage of employees with abnormal findings indicated in health checkups: 50% or lower
3. Diversify opportunities to enhance the abilities of1) Utilize one-on-one meetings that bring out the motivation and potential of every employee and boost the growth of
employees according to employee needs and work
subordinates through regular dialogues between superiors and subordinates
needs2) Reconstruct the human resources development program (in-house education, external education, etc.) to provide
opportunities to employees to enhance their abilities in line with their roles
3) Provide opportunities for self-development matched to each employee’s life plans and needs (correspondence courses,
online training, etc.)

8 Engagement with Stakeholders
Vision for 2030

A company that is appreciated and understood to be the world leader in non-ferrous metals

KPI Indicators

Goals

1. Further penetrate our Group brand among
employees
2. Ensure quality and quantity in communication of
information and dialogue at the level of “world
leader in the non-ferrous metals industry”
3. I ncrease in recognition and understanding of ourgoal of “world leader in the non-ferrous metals
industry”• Improve results of employee awareness survey (increase ratio of employees who feel pride in working at the Company)• Expand opportunities for dialogues with media and investors• Achieve positive evaluations of our Integrated Report from outside the Company• Improvement in findings of surveys by external bodies (degree of recognition and understanding, etc.)

Medium- to Long-Term Strategy for Value Creation

3. D emonstrate and commercialize automobile secondary battery recycling technology

P.33-126

9 Co-Existence and Mutual Prosperity with Local Communities
Vision for 2030

A company that contributes to regional development and earns trust as a member of the local community

KPI Indicators

Goals

Participate in local communities through dialogue
and collaboration
1. Support the local community via employee
participation
2. Hire and procure locally
3. S upport for nurturing of the next generation

Accurately identify local issues through dialogues with local communities, and execute the following measures

4. S upport for people with disabilities and the elderly
5. Support during and after disasters• Implement employee participation programs (from 2023)• Continually implement and assess of performance1) Implement programs to nurture the next generation in collaboration with government, local bodies, NPOs, etc. (one ormore times/year)2) Establish and award scholarships in Japan and maintain existing overseas scholarships (from 2023)• Implement programs to support people with disabilities and the elderly in collaboration with government, local bodies,
NPOs, etc. (one or more times/year)• Support regions affected by large-scale disasters

10 Rights of Indigenous Peoples
Vision for 2030

A company that understands and respects the traditions and culture of indigenous peoples

KPI Indicators

Goals

1. Understand indigenous peoples and their traditions
and culture
2. Support initiatives that lead to respect for the traditions and cultures of indigenous peoples• Percentage of SMM Group sites implementing in-house education: 100% by the end of FY2023
1) Provide scholarships for indigenous peoples (continue existing initiatives)2) Support indigenous people-related initiatives by NGOs, academic societies, etc.: one initiative or more each year

11 Human Rights in the Supply Chain
Vision for 2030
KPI Indicators

A company that undertakes sustainable procurement across the supply chain
Goals

Promote sustainable procurement, particularly respon- 1. Responsible mineral sourcing
sible mineral sourcing
1) Establish a responsible mineral sourcing management system in line with international standards by the end of
FY2021
2) Maintain a record of zero mines, smelters, and refineries complicit in child labor or other infringements of humanrights in the supply chain
2. Sustainable procurement
1) Business partners that have received and agreed with the Sumitomo Metal Mining Group Sustainable Procurement
Policy: 100% by the end of FY2030
2) Establish a sustainable procurement management system in line with international standards by the end of FY2024
3) Continue implementing due diligence (DD)* The underlined KPIs for this year have been partially revised.
No change has been made to the material issues.

86

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Integrated Report 2023

87Medium- to Long-Term Strategy for Value Creation

Vision for 2030

1 Effective Use of Non-Ferrous Metal Resources

2 Climate Change

The SMM Group is engaged in the mining of natural resources, the production of highly advanced materials, and everything in between. We
handle a wide range of non-ferrous metal materials in the process. We believe that it is the SMM Group’s responsibility to take on the challenge of making more effective use of limited non-ferrous metal resources without waste through the utilization of resources that could hitherto not be used due to technical obstacles and through the development of recycling technologies.

Society’s demand for companies to reduce greenhouse gas (GHG) emissions has increased dramatically, and the business risks associated withclimate change are also increasing. On the other hand, a stable supply of products contributing to a low-carbon society, such as the secondary battery materials for electric vehicles, and near-infrared absorbing materials produced by our Group, is expected to contribute to the
reduction of GHG emissions.

Vision for 2030

A company that generates resources through high technological capabilities

Vision for 2030

1. A company that stably provides non-ferrous metals to society
2. A company that contributes to society by effectively using impurities through collaborative, open technological development among industry, academia, and government
3. A company that contributes to the construction and maintenance of recycling systems for non-ferrous metals
4. A company that develops and supplies highly advanced materials that contribute to the resolution of social issues
KPI Indicators

Goals

1. 1) Advance copper mine projects• Strengthen production structure at JV mines to achieve and maintain Copper production fromcopper production levels of 300 kt/ year from interests
interests• Achieve steady copper production level by reinforcing exploration ofsurrounding and deep areas in JV mines, expanding mineral processing technology, and improving operations leveraging IoT and AI• Advance Phase 2 and later projects at the Quebrada Blanca Copper
Mine

Main results

GHG Emissions (Scope 1 and 2)(kt-CO2e)
3,0003) Improve productivity by introducing newtechnology• Promote remote operation and unmanned operation of heavy• Promotion of DX atmachinery and information infrastructure equipment inside and out- Hishikari Mineside of the Hishikari Minep. 804) Advance nickel ore projects and improve
productivity(1) Nickel production: 150 kt/year(2) Recovery rate compared to FY2018: +2%(3) Recovery of scandia by-product(4) Recovery of chromite by-product

p. 41

2,647

2,823

FY2021

FY2022

2018

2019

2020

2021

420 kt-CO2e

540 kt-CO2e

2022

Medium- to Long-Term Strategy for Value Creation• Participate in business and technology for recovery of lithium fromsalt-lake water in the presence of high levels of impurities• Extraction of lithium

p. 76

3. Demonstrate and commercialize automobile secondary battery recycling technology• Demonstrate, commercialize, and expand scale of recycling technology that recovers cobalt from automotive lithium-ion batteries
Commence commissioning and commercial operation of pre-commercial plant: FY2026

Progress in the commercialization of the recyclingof batteries

p. 644. 1) L everage our strengths to create new products
and new businesses that contribute to society• Research, develop, and commercialize new advanced materials in
the fields of energy, automobiles, and information communications• Maintain top class global share in the expanding cathode materials
market

2,760

1,000

(FY)

3) Recover non-ferrous metals from hard-to-process
resources

3) Expand sales of low-cost battery cathode materials through favorable, stable procurement of ourown nickel raw materials

2,807 Smelting & Refining Business in Japan    Mineral Resources Business in Japan   Battery Materials Business/Advanced Materials Business   Other Businesses in Japan    Smelting & Refining Business overseas   Mineral Resources Business overseas    Materials Business overseas• Contribute to existing (e.g. marine resource development) and new
development projects• Commercialize NiO for fuel cells following demonstration projectContributing to a Low-Carbon Society
2,809

GHG Reduction by Products Contributing to a Low-Carbon Society02) Hold raw materials in-house for favorable and stable procurement

Expand Contribution of GHG Reduction by Products

2,0002) Develop technology to create value from unused
non-ferrous metal resources

Progress in cathode materials market share* The Scope 1 and Scope 2 numbers are in the Sustainability Report 2023
See p. 50
The Scope 3 numbers are in the Sustainability Report 2023
https://www.smm.co.jp/en/sustainability/library/sustainability_report/

See p. 46

Main Initiatives

p. 69

See Sustainability Report 2023 for details on results
https://www.smm.co.jp/en/sustainability/library/sustainability_report/

Main Initiatives
Recycling of Low-Grade Nickel Oxide Ores

Recovery of Scandium and Chromite

Low-nickel-content oxide ores found near the earth’s surface are said
to account for about 70% of the world’s nickel oxide mineral
resources, but smelting and refining using these ores as raw materials
involves numerous technical challenges that made it difficult toachieve on a commercial basis. Drawing on our advanced equipment
engineering and operation technologies, in April 2005 our Group led
the world in achieving large-scale commercial production via thehydrometallurgical processing technology known as high pressureacid leach (HPAL) at Coral Bay Nickel Corporation (CBNC) in thePhilippines. Further, from 2013, Taganito HPAL Nickel (THPAL) began
operations as the second plant using HPAL technology. The nickel
intermediate smelted and refined at these two HPAL plants are usedin Japan as electrolytic nickel and cathode materials for secondary
batteries for electric automobiles.

Nickel ore, the raw material for HPAL, contains trace amounts of scandium and chromite, and THPAL is engaged in the business of recovering them. We began commercial production of scandia in January
2019 and chromite in March 2021. Scandia is expected to be indemand for solid fuel cells and aluminum alloys, while chromite is
expected to be in demand for stainless steel and a wide array ofother special steels. The SMM Group intends to add value to its HPAL
technology by efficiently recovering these by-products.

Integrated Report 2023

1. C ontinuing to grow our business while maintaining GHG emissions below the level of FY2013. Accelerating actions toachieve net zero GHG emissions by 2050 or sooner.
2. C ut GHG emissions intensity by at least 26% compared to FY2013
3. E xpand contribution of GHG reduction by products contributing to a low-carbon society: 600 kt-CO2 or more

Main Results• Develop new mines for which we have operatorship

SUMITOMO METAL MINING CO., LTD.

Goals

p. 41

2. 1) D evelop technology to separate, stabilize and• Develop technology to stabilize and bleed off impurities: Develop
bleed off impurities, and create value from impuri- and demonstrate the processties generated by smelting processes and mines

88

KPI Indicators
Reduce GHG emissions

Reference page(s)2) Acquire new superior copper and gold resources• Nickel-based productproduction

A company that actively undertakes climate change countermeasures, by reducing emissions and stably supplying
products contributing to a low-carbon society, a future with zero greenhouse gases (GHGs)

Reduction of GHG Emissions in the Manufacturing Process

Realizing a Stable Supply of Non-Ferrous Metal Resources

In the manufacturing process, we are working to reduce GHG emissions through initiatives that include medium- to long-term energy
conservation and energy conversion.
Using Internal Carbon Pricing
The SMM Group implemented Internal Carbon Pricing (ICP), an actionin which companies set an in-house carbon price to promote capital
investments for decarbonization and energy savings and consider
GHG emission reductions as a capital investment effect. Since introducing an ICP in September 2020, we have moved forward with decarbonization investments that make active use of ICP at business sites.
Specifically, in addition to energy-saving investments, such as introducing LED lighting and replacing to highly efficient air conditioning
equipment, we are actively taking on various challenges, including
those related to solar power and a fuel conversion from heavy oil to
LNG, which previously could not be undertaken because of poor
investment return. We plan on further expanding ICP measures.

The SMM Group plays a crucial role in providing renewable energy,
which is a major trend in realizing a carbon neutral society, and themain mineral resources used in the electrification of EVs and othervehicles. We are also developing technologies for the efficient recovery of lithium from salt lake water and studying its industrialization.
The exact metal usage per vehicle increases as electrification
advances, with copper requiring 3.6 times the weight equivalent of agasoline-powered vehicle. We believe that meeting the growing
demand for such materials is an important role that our Groupshould fulfill.

Development and Supply of Products that Contribute to a
Low-Carbon Society
Products or materials that contribute to reducing GHG emissions
across society through the production and supply by our Group are
positioned as low-carbon products, and their development and supply to the market are actively promoted.

Establishing Innovative Technologies that Support
Decarbonization
In achieving carbon neutrality for our Group, it is essential to develop
innovative technologies that lead to a dramatic reduction in GHG
emissions within smelting and refining operations, which account for
90% of our total emissions, and to apply these technologies to ourmanufacturing processes. In copper smelting and refining, we aredeveloping hydrogen reduction technology to reduce coal consumption, and for nickel smelting and refining, we are developing anext-generation process and CO2 fixation technology. We have oureye on the future as we work in collaboration with multiple universities and companies to proactively pursue next-generation technology.

* Of our products, the combined value that cathode materials for automobile batteries and near-infrared absorbing material (CWO (only for automobile glass)) fromobjectively calculated technical data provided by the public or by customers.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

89

Medium- to Long-Term Strategy for Value Creation

Vision for 2030

2 Climate Change
Action for TCFD
In February 2020, we became a supporter of the Task Force on Climate-related Financial Disclosures (TCFD). We have not only listed
climate change as a material issue in Vision for 2030, which was formulated and released in March 2020, and strengthened efforts toachieve the vision of “a company that actively undertakes climate change countermeasures, by reducing emissions and stably supplying products contributing to a low-carbon society, a future with zero greenhouse gases (GHGs),” but also indicated that we will

move forward with disclosure of related information. The TCFD recommends that the disclosure of climate change-related risks andopportunities should be organized according to four core elements of corporate management and operations (governance, strategy, risk management, and metrics & targets), and we are disclosing information in line with these recommendations.
The Group responds to the CDP Climate Change Questionnaire annually regarding its GHG management.

Climate Change Scenario Analysis
We considered two scenarios for 2050.
1.5˚C scenario  A scenario in which ongoing efforts are made to keep the rise in average temperatures to within 1.5˚C. The IEA’s WEO 2019
Sustainable Development Scenario (SDS),1 Beyond 2°C Scenario (B2DS),2 and the IPCC’s special report “Global Warming of
1.5˚C”3 were information sources for this scenario.
4˚C scenario

Scenario A scenario in which no countermeasures are taken, and temperatures are allowed to continue rising. Information sources
included the IEA’s WEO 2018 New Policies Scenario and the IPCC’s RCP4 8.5 Scenario.
DriverClimate change
policyCarbon pricing (carbon taxes, emissions
trading, etc.)• Overall monetary amounts have risen(depending on nation or region)

Climate change
policyTightening of vehicle regulations, policy to promote LEVs

• Fuel consumption regulations have been tightened and restrictions on movement introduced• P olicy is supportive of EVs and LEVs
• Internal combustion-based vehicles havebeen replaced by LEVs

Society andinfrastructure

Technology
1.5˚C

Climate change
policyTechnology

Society andinfrastructure

4˚C

Temperaturesand rainfall

Progress of digitaltransformation
related to vehicles,changes in values
Development ofhydrogen technology, fuel cells
Shift to electricalenergyTechnological shift
in automobile storage batteries

Anticipated situation (2050)

Impact on business

Increased tax burden, etc.

• S elf-driving vehicles, MaaS5, and car-sharing
are common• Fewer households own cars
• Fuel cell vehicles (FCV) are common• EVs and plug-in hybrid EVs (PHEV) arecommon• Electricity occupies a higher proportion of
final energy consumption• There has been a shift in the market share ofautomobile storage batteries

Increases in R&D costs and investment in low-carbon facilities
and equipment• Increase in sales due to growing demand for batteries and nickel
accompanying the spread of EVs• Increase in sales of nickel oxide powder and lithium-ion batteries accompanying the development of a hydrogen society andthe spread of FCVs
• Increase in sales of other products contributing to a low-carbon
society• Increase in demand for copper accompanying the strengthening ofelectrical grids (although there is competition from aluminum, etc.)• Rise in the proportion of nickel used in batteries and increased
sales of nickel accompanying efforts to move away from cobalt• Spread of solid state batteries that leverage SMM technology as
next-generation batteries• Spread of iron and manganese-based batteries accompanying
efforts to move away from cobalt• Spread of new batteries that do not leverage SMM technology
as next-generation batteries• Limits on raw materials sourcing, increase in materials and manufacturing costs, greater advantages due to owning our own
mines• Expansion of the automobile secondary battery recycling
business• Impact of ESG investment on financing• Reputational risk if SMM’s efforts are evaluated as insufficientInterest in matterssuch as sustainableprocurement,
environmental footprint, and the social
impact ofbusinesses• There is greater awareness regarding
sustainability• ESG investment is mainstream• There are more possible applications for alternative materials and recycled metals

Rises in averagetemperature, sea
surface temperature,and sea levels• Sea levels have risen• Storm surges are more frequent

Decline in port functionality, greater risk of storm surges, possibility of facility-based countermeasures needing to be taken atsome coastal business sites•H eavy rains and typhoons are more frequent• Increased risk of flooding and water shortages depending on region

Increase in risk of flooding or water shortages at business sites incertain regions, possibility of facility-based countermeasuresneeding to be taken
Decline in operations at key suppliers, decline in plant operations
due to interruptions to procurement and shipping routes
Possibility of facility-based countermeasures needing to be taken
due to the increased risk of damage to tailings dams

Increase in abnormal climate events,
such as heat waves,
flooding, and water
shortages

Risk and opportunity(medium- to long-term)
Risk

Large

Risk

Short- to long-term, large

SMM Group approach: Initiatives for realizing Vision for 2030

• Climate Change: Reduce GHG emissions• Climate Change: Reduce GHG emissions• Effective Use of Non-Ferrous Metal Resources
Improve productivity by introducing new technology, Advance nickel ore projects and improve productivity

Opportunity

Large• Climate Change: Reduce GHG emissions• Effective Use of Non-Ferrous Metal Resources
Advance nickel ore projects and improve productivity, Develop technology to create value from unused non-ferrous metal resources, Leverage
our strengths to create new products and new businesses that contribute to society, Hold raw materials in-house for favorable and stable procurement, Expand sales of low-cost battery cathode materials through favorable, stable procurement of our own nickel raw materials

Opportunity

Large• Effective Use of Non-Ferrous Metal Resources
Advance copper mine projects, Acquire new superior copper and gold resources

Opportunity

MediumRisk

MediumOpportunity

MediumMedium- to Long-Term Strategy for Value Creation

Category

1. A scenario published by the International Energy Agency (IEA), and adopted in World Energy Outlook (WEO) 2019, a report that presents the outlook for energy supply and demand
and technological developments, and analyzes the path that should be followed to fully achieve the goals set forth in the Paris Accords.
2. A scenario in “Energy Technology Perspectives” (ETP) published by the IEA.
3. A report published by the Intergovernmental Panel on Climate Change (IPCC).
4. Representative Concentration Pathways (RCP)• Climate Change: Reduce GHG emissions• Effective Use of Non-Ferrous Metal Resources
Advance nickel ore projects and improve productivity, Develop technology to create value from unused non-ferrous metal resources,
Leverage our strengths to create new products and new businesses that contribute to society, Hold raw materials in-house for favorable
and stable procurement, Expand sales of low-cost battery cathode materials through favorable, stable procurement of our own nickel raw
materials• Effective Use of Non-Ferrous Metal Resources
Advance copper mine projects, Acquire new superior copper and gold resources, Advance nickel ore projects and improve productivity, Hold raw
materials in-house for favorable and stable procurement, Demonstrate and commercialize automobile secondary battery recycling technology• Human Rights in the Supply Chain:
Promote sustainable procurement, particularly responsible mineral sourcing• Rights of Indigenous Peoples: Understand indigenous peoples and their traditions and culture, Support initiatives that lead to respect for
the traditions and cultures of indigenous peoples

Risk

Medium to large

Risk

Large

• Significant Environmental Accidents and Biodiversity: Zero significant environmental accidents

Risk

Large

• Significant Environmental Accidents and Biodiversity: Zero significant environmental accidents

Risk

Large

• Significant Environmental Accidents and Biodiversity: Zero significant environmental accidents, Reduce emissions of hazardous substances

Risk

Large

• Significant Environmental Accidents: Zero significant environmental accidents

5. Mobility as a Service (MaaS): a service that optimally combines multiple transportation services (buses, trains, cabs, airplanes, etc.) and performs search, reservation, payment, etc. all at once.

90

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91

Medium- to Long-Term Strategy for Value Creation

Vision for 2030

3 Significant Environmental Accidents  

4 Biodiversity

5 Employees’ Occupational Health and Safety

The SMM Group recognizes that there are risks of adverse impacts on the natural environment when developing natural resources and usingchemical substances. In addition to preventing significant environmental accidents, we recognize that minimizing our negative environmental impacts, including the rationalization of water use, and preserving biodiversity in our day-to-day management of operations are prerequisites for business continuity.
Vision for 2030

A company that values water resources and biodiversity, and protects the richness of the sea and land

It is the responsibility of management to prevent work-related accidents and illnesses, provide a safe and healthy work environment, andstrive to improve employee comfort. All of these also lead to greater motivation and productivity among employees. The SMM Group bases
management on job classification, striving to ensure the safety and health of our employees through intrinsic equipment safety improvements and safety education.
Vision for 2030

A company where all employees work together with safety first the priority in a comfortable working environment aswell as safe facilities and operations

KPI Indicators

Goals

1. Z ero significant environmental accidents

1) Promote improvements through the use of risk management and environmental management systems2) Reinforce and improve equipment and infrastructure to address increases in sources of natural hazard

KPI Indicators

Goals

1. Prevent occupational accidents1) Optimize water use; reduce emissions of hazardous substances to the atmosphere and water2) Promote various environmental preservation and biodiversity preservation activities, such as regular reforestation

Serious accidents: zero (in Japan and overseas, including contractors)
All accidents: reduce year-on-year, with aim of eventually reaching zero

2. Prevent occurrence of occupational diseases

Number of workplaces that present higher health risks: reduce year-on-year
Occurrence of occupational diseases: zero

2. Reduce emissions of hazardous substances(year-on-year)

Main Results

Main Results

PRTR Substance Releases, by Destination
Number of significant environmental accidents in FY2022

0

(t)
120

100

80

3

0.7

85

15

77

40
0
(FY)

97

19

79
3

2018

0.7

2019

78

9

74
1

1.7

2020

Work-Related Incidents and Frequency Rate
84

9
67

1

2021

0.9

8

75
1

0.7

2022

Japan

2.0

1.71

1.5

1.61

1.48
1.05

1.13

0.5

2018

Japan  

0.35

0

0.35

2019

2020

2021

0.31
2022

Overseas

Managing Tailings Dams
Tailings facilities in which tailings from mines are dumped may collapse and cause considerable damage.
In August 2020, Global Tailings Review (GTR) formulated the Global
Industry Standard on Tailings Management (GISTM). The International
Council on Mining and Metals (ICMM) is committed to compliancewith GISTM. As a member of ICMM, we are conducting examinations
to comply with the standard.
Our Group thoroughly implements measures to prevent major
environment accidents at closed mines that it manages and tailings
dams managed by Coral Bay Nickel Corporation (CBNC) and Taganito
HPAL Nickel Corporation (THPAL), both of which are located in thePhilippines.
In August 2022, based on the GISTM, we disclosed information on
our website about tailings dams with Very High or higher risk (CBNC:
1 location; and THPAL: 1 location).

Rehabilitating Tailings Dams
CBNC and THPAL produce intermediates for electrolytic nickel andnickel sulfate. At tailings dams, the slurry after the recovery of nickel
through the production process is treated through neutralization toeliminate toxins and precipitate heavy metals. The treated slurry isthen pumped to the tailings dam where it allows the solids to settle
down.
When the storage capacity of the tailings dams is reached, the site
is rehabilitated in order to establish an independent and sustainableecosystem. Rehabilitation does not simply mean greening, but also
making it possible for agricultural farming, and, thus, vegetables andfruits are also grown in the area. Many local residents and indigenous
peoples are involved in this work, and rehabilitation plays an important role in creating local employment.

0

0

0

0

0

0

0

0

Water Risk Management
Water is a shared resource of local regions in the lives of local residents and communities, as well as to the surrounding ecosystem. In
addition to identifying water risks using WWF Water Risk Filter andthen reducing those risks, our Group gives consideration to local
communities and the environment in areas where we use water andare working with a sense of responsibility to make good use of thelimited water resources.
At CBNC, on Palawan Island, in the Philippines, they treat supernatant water accumulated in tailings dams at recycling facilities andthen reuse the water in the smelting and refining process. The company also supplies that water as industrial water to its suppliers oflime slurry.
A team that consists of members from the Environmental
Management Office (EMO), the department that conducts environmental management activities for the company, local governments,
NGOs, and other entities, strives to reduce the environmental effects
caused by wastewater by conducting regular water quality tests todetermine if plant operation is having a major impact on surrounding water.
WEB Water policy

https://www.smm.co.jp/en/sustainability/management/water_policy/

Main Initiatives
Occupational Health and Safety Committee
In accordance with the Industrial Safety and Health Act, theOccupational Health and Safety Committee meets once a month ateach of the Group’s business sites in Japan. At the Occupational
Health and Safety Committee meetings, a wide range of health andsafety issues are discussed, including the progress of health andsafety activity plans, analysis of the causes of occupational accidents
and measures to prevent recurrence, results of working environment
measurements, results of medical examinations, reports on improvements to equipment and work methods, reports on the correction ofareas identified during patrols, safety and management methods for
new chemical substances handled, results of pre-operational safety
examinations of new equipment, and information on legal revisions.
A summary of the Occupational Health and Safety Committee meetings is reported monthly by business sites to the Safety andEnvironment Control Department, which confirms that safety andhealth activities are being properly implemented at each business site.
At SMM Group’s overseas business sites, occupational health and safetycommittee meetings are held in accordance with the laws and regulations of each country to ensure workplace safety through the creation of
accident prevention measures among businesses and their workers.
Regarding regular contractors, Occupational Health and Safety
Committee meetings and informal gatherings are held every monthby contracting organizations in which contractors and others participate and information is shared. This information is taken back to thecompany where it is shared and used to make notifications.

Occupational Health and Safety Risk Assessments
The SMM Group proactively uses risk assessments (investigation of
SUMITOMO METAL MINING CO., LTD.

Number of fatalities
as a result of workrelated ill health
Number of cases ofrecordable workrelated ill health** Regarding employees in Japan, we also record the number of workers who receive
abnormal findings but do not require treatment (as this is personal information, it is
not disclosed).

Main Initiatives

92

Overseas
NonNonEmployees employee Employees employee
workers
workers

1.63

1.0

0
(FY)

“Employees” includes employees and parttime workers from Group companies

Medium- to Long-Term Strategy for Value Creation

 Landfill (SMM premises)    Soil    Water    AtmosphereWork-Related Ill Health (2022)

Integrated Report 2023

hazard or harmfulness) to evaluate hazards and take appropriate
countermeasures against sources of risk that may cause accidents orhealth hazards due to equipment, operations, or a combination of
both. For example, when we introduce new equipment, we conduct
a risk assessment at the time of design, taking into consideration the
intrinsic safety of the equipment, and the risk assessment is reflectedin the design of the equipment. Before equipment is installed andput into operation, a risk assessment (audit) is conducted again withsupervisors, operators, etc., and improvements are made. After thefacility goes into operation, we continuously report on the status ofmaintenance and improvement of residual risks at the Health and
Safety Committee meetings, and work to improve the level of healthand safety by ensuring that our efforts are promoted.

Education in Hands-on Training Facilities
Since 2010, the SMM Group has been operating a hands-on training
facility (Oji-kan) in Niihama City, Ehime Prefecture, which consists of a
Hazard Simulation Zone and an Equipment Training Zone. The purpose of the Hazard Simulation Zone is to increase sensitivity to occupational safety and health through simulated experiences of dangers
that may be present in daily work, while the purpose of theEquipment Training Zone is to develop operators with strong skills inequipment and devices through hands-on experience with actual
on-site equipment, cut models, etc. In addition to the curator andfull-time instructors, site managers and supervisors, and veteranemployees from throughout the Company and the Group, provide
training as associate instructors. Oji-kan staff have been traveling toworkplaces since 2013 to conduct hazard simulation training, and weare working to expand the number of participants.
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93

Medium- to Long-Term Strategy for Value Creation

Vision for 2030

6 Diverse Human Resources   

7 Development and Participation of Human Resources

8 Engagement with Stakeholders

The source of the SMM Group’s growth is its employees. We respect individuality and diversity, and aim to create an open and vibrant organizational climate in which everyone can demonstrate their strengths and thrive. With the globalization of business and the rapid developmentof DX, it is a management challenge to develop human resources who can think and act on their own initiative based on their expertise.
A company where all employees can take a vibrant and active part

Vision for 2030

1. A company that respects the humanity of each and every employee, and where employees feel pride, motivation, and joy in work
2. A company that provides each and every employee with opportunities to improve his/her capabilities, and grows together with employees
KPI Indicators

Goals

Vision for 2030

A company that is appreciated and understood to be the world leader in non-ferrous metals

KPI Indicators

Goals

1. Promote working style reform and create workplaces 1) Improve scores for “Management by managers and superiors,”“Appeal of job,” and “Work environment” in employee awareness surveythat make use of digital technology, enabling2) ( 1) Number of female managers: 50 (SMM non-consolidated)diverse human resources to play vibrant and active(2) Ratio of female employees: 20% or higher (SMM non-consolidated)roles3) Expand number of managerial track employees of foreign nationality
4) Percentage of employees with disabilities: 3% or higher (SMM non-consolidated)5) Assign jobs and provide support matched to employees’ life stages

1. Further penetrate our Group brand among
employees• Improve results of employee awareness survey (increase ratio of employees who feel pride in working at the Company)

2. Ensure quality and quantity in communication of
information and dialogue at the level of “world
leader in the non-ferrous metals industry”• Expand opportunities for dialogues with media and investors• Achieve positive evaluations of our Integrated Report from outside the Company

2. Support employees’ mental and physical health1) Reduce the number of employees taking long-term leave2) Percentage of employees with abnormal findings indicated in health checkups: 50% or lower

3. Increase in recognition and understanding of our goal of • Improvement in findings of surveys by external bodies (degree of recognition and understanding, etc.)“world leader in the non-ferrous metals industry”

3. Diversify opportunities to enhance the abilities of
employees according to employee needs and workneeds1) Utilize one-on-one meetings that bring out the motivation and potential of every employee and boost the growth ofsubordinates through regular dialogues between superiors and subordinates2) Reconstruct the human resources development program (in-house education, external education, etc.) to provide
opportunities to employees to enhance their abilities in line with their roles
3) Provide opportunities for self-development matched to each employee’s life plans and needs (correspondence courses,
online training, etc.)

Number and Percentage of Female Managers
7.0
5.0

50

0

Sumitomo Metal Mining Co., Ltd. Integrated Report 2022

Q. Overall, are you proud to work at SMM?

Major Awards

2.0

11

14

FY2020

FY20213.0

2.9

FY2022

（%）
7.5

50

(hours)200,000

5.0

119,222
99,738100,000
2.5

End of FY2024 End of FY2027 End of FY2030

50,00000(FY)(hours)40

188,913150,000

35

25

20

FY2019Time Spent on Employee Education(target)1.5

Results of Employee Awareness Survey

10.3

131,106
29.8
22.9

20.8

18.7

2019

2020

2021

2022

0

Annual hours of education per SMM
Group’s employee (average)

Officers
Female11.0

12.0Managers
Male
FemaleRegular employees
MaleFemale

20.6

27.4

9.1

20.4

Occasional
employees

Company
Average8.5

22.9* In addition to the total time spent on education, employees spent the following number of hours on e-learning courses: 5,763 hours for SMM non-consolidated, and 2,012 hours forconsolidated subsidiaries in Japan and overseas.

Main Initiatives
Initiatives toward Gender Balance (women’s active engagement)

Illness Prevention and Health Promotion Initiatives

To realize our Vision for 2030 to create workplaces where diverse humanresources can play vibrant and active roles, we have set “number andpercentage of female SMM managers” and “number and percentage offemale SMM employees” as KPIs. In FY2022, the percentage of female
SMM managers was 2.9% (20 managers) and the percentage of female
SMM employees was 12.9% (445 employees), both figures having
increased from the fiscal year. We have formulated an action plan basedon the Act on the Promotion of Women’s Active Engagement inProfessional Life* and are working to achieve our goals. Furthermore,through various measures such as proactive recruitment, appointment
to a wide range of positions, and training of female leaders, we are making efforts toward furthering the active engagement of women.

In cooperation with the SMM Health Insurance Association, we aremaking initiatives for illness prevention and health promotion for our
employees and their family members (dependents). To prevent lifestyle-related diseases, we promote the implementation of specifichealth checkups and specified health guidance, and encourage
those at particularly high risk of serious illnesses to undergo checkups. We also subsidize all or part of the costs of various medical
examinations, complete medical checkups, and complete brain
checkups. When undergoing complete medical checkups, employees can take health management leave (up to two days per year).
Furthermore, to promote smoking cessation, we have reduced thenumber of smoking areas and offer an online smoking cessation program for those who wish to quit. About 70% of participants in thesmoking cessation program have successfully quit smoking.

* Enacted in 2016 with the aim of realizing a society in which women can fully
demonstrate their individuality and abilities, this law stipulates the responsibilities of
the national government, local governments, and general business owners withregard to the promotion of women’s active engagement.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

16.40%

Positiveanswers

47.29%

8.47% 2.16%

2nd Nikkei Integrated
Report Award

63.69% 26.55%
6.99% 2.77%

Main Initiatives
Implementation of the Employee Awareness Survey

Average Training Hours per Employee (FY2022)
Male

FY2021WICI Japan Integrated
Reporting Awards 2022

62.44% 26.93%

20

Total training hours for all employees (left axis)
Average annual training hours per employee (right axis)

 Number of female managers (left axis)  
Percentage of female managers (right axis)

48.41%

10

36,051201830

14.03%

Positiveanswers

Details ofrecognition
Recognition ofSilver Award fordescriptive detail andExcellence incompleteness ofIntegrated Reporting
information
Particularly, the completeness of ourGrand Prix S Award
report’s descriptionof social (S) initiatives
Details of the award

Medium- to Long-Term Strategy for Value Creation(managers)
75

25

Main Results

 Very proud  Somewhat proud  Neutral  Not much  I feel no pride at all

Main Results

94

The SMM Group’s main premise for business continuity is to earn a social license to operate. To this end, we recognize the importance of promoting information disclosure and transparency to the greatest extent possible, as well as deepening mutual understanding and building
relationships of trust through ongoing dialogue with local communities and other stakeholders. In particular, when there is a risk that development may affect the livelihood of indigenous peoples, we gain a thorough understanding of their culture, traditions and history andengage in a continuing dialogue prior to development. It is then necessary to proceed carefully to prevent such impacts of development.

The SMM Group has commissioned a specialized external organization
to conduct employee awareness surveys in order to measure the satisfaction and engagement of its employees, who are important stakeholders, and to create a better company and workplace. These surveys
have been conducted every three years since FY2010, with the fifth
survey conducted in FY2021. A total of 5,153 people were surveyed,with a total of 141 questions, and a response rate of 94.4%. Their purpose is to gain a quantitative understanding of how employee awareness has changed over the three years since the previous survey andwhat kind of awareness employees currently have about working at
the Company, and to use this information to develop management
measures to create an even better company and workplace.
The results of this survey are fed back to top management, generalmanagers of departments and divisions at the head office, heads of business divisions and business sites, presidents of Group companies, labor
unions, etc. For directly controlled business sites, Group companies, andother sites, we disclose data by site to help improve management at
each site. In FY2022, we held approximately 30 feedback briefings on
the results of the FY2021 survey. The survey results and explanatory
articles are published in in-house bulletins for employees to read.
In order to make more effective use of the employee awarenesssurvey, the frequency of the survey will be increased from every three
years to annually starting in FY2023, and the survey content andfeedback methods will be revised.

Communication with Shareholders and Investors
The SMM Group strives to provide our shareholders and investors

with the information we think they need in a timely, appropriate, fair,and easy-to-understand manner.
On our website, we share our latest announcements, management
policies and strategy, business descriptions, business results, andother information. We also deliver reports to shareholders twice a year
and report on financial results and the progress of business strategies.
We have also formulated an IR Policy to ensure IR activities are
implemented appropriately, which is publicly available on our website. For institutional investors and securities analysts, we hold telephone conferences at the time of announcement of our financial
results, four times a year, and twice a year the president and/or general managers of business divisions give Business Strategy Progress
Briefing Sessions after the announcements of our financial results. In
February 2022, we announced our 2021 3-Year Business Plan andheld a briefing session. We are making efforts to proactively disclose
information necessary for investment decisions by committing toregular individual dialogues with major institutional investors andholding briefings for individual investors as well.

Enhancement of Information Communication
Since 2016, the SMM Group has published these integrated reports
to help shareholders, investors, and other stakeholders attain adeeper understanding of the SMM Group’s initiatives toward sustainable growth and maximization of corporate value. In the Sumitomo
Metal Mining Integrated Report 2022, published in September 2022,
we have tried to make it easy to understand and comprehensive, andhave tried to explain the SMM Group’s value creation while further
integrating sustainability and our business operations.
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Medium- to Long-Term Strategy for Value Creation

Vision for 2030

9 Co-Existence and Mutual Prosperity with Local Communities

10 Rights of Indigenous Peoples

The SMM Group’s main premise for business continuity is to earn a social license to operate. To this end, we recognize the importance of promoting information disclosure and transparency to the greatest extent possible, as well as deepening mutual understanding and building
relationships of trust through ongoing dialogue with local communities and other stakeholders. In particular, when there is a risk that development may affect the livelihood of indigenous peoples, we gain a thorough understanding of their culture, traditions and history andengage in a continuing dialogue prior to development. It is then necessary to proceed carefully to prevent such impacts of development.

The SMM Group’s main premise for business continuity is to earn a social license to operate. To this end, we recognize the importance of promoting information disclosure and transparency to the greatest extent possible, as well as deepening mutual understanding and building
relationships of trust through ongoing dialogue with local communities and other stakeholders. In particular, when there is a risk that development may affect the livelihood of indigenous peoples, we gain a thorough understanding of their culture, traditions and history andengage in a continuing dialogue prior to development. It is then necessary to proceed carefully to prevent such impacts of development.

Vision for 2030

A company that contributes to regional development and earns trust as a member of the local community

A company that understands and respects the traditions and culture of indigenous peoples

Goals

KPI Indicators

Goals

Participate in local communities through dialogue and collaboration

Accurately identify local issues through dialogues with local communities, and execute the following measures

1. Understand indigenous peoples and their traditions
and culture• Percentage of SMM Group sites implementing in-house education: 100% by the end of FY2023

1. Support the local community via employee
participation• Implement employee participation programs (from 2023)

2. Support initiatives that lead to respect for the traditions and cultures of indigenous peoples

1) Provide scholarships for indigenous peoples (continue existing initiatives)2) Support indigenous people-related initiatives by NGOs, academic societies, etc.: one initiative or more each year

2. Hire and procure locally• Continually implement and assess of performance

3. S upport for nurturing of the next generation

1) Implement programs to nurture the next generation in collaboration with government, local bodies, NPOs, etc. (one or more times/year)2) Establish and award scholarships in Japan and maintain existing overseas scholarships (from 2023)

Main Initiatives

4. S upport for people with disabilities and theelderly• Implementprograms to support people with disabilities and the elderly in collaboration with government, local bodies, NPOs,
etc. (one or more times/year)

Initiatives through Dialogue at Business Sites

5. Support during and after disasters• Support regions affected by large-scale disasters

Main Results
Investment in Infrastructure and Support Services1
RegionPhilippines

DetailAmount (FY2022)•D onations to scholarship funds for orphans in Iwate, Miyagi, and Fukushima Prefectures, which were hit by the Great
East Japan Earthquake (making donations every year since 2012)•D onations to medical organizations such as the Cancer Institute and the Japan Heart Foundation•D onations to sports organizations such as the Japanese Para-Sports Association• S upport for basic science research, environmental research, and activities for the maintenance and restoration of cul¥250 million
tural properties through The Sumitomo Foundation•D onations to Keidanren Nature Conservation Fund• Support for employment of former inmates and others by donating to the National Organization of Labor Support Providers• S upport for victims of crime through donations to the Victim Support Center of Tokyo• Expenditures for social contribution activities, including donations to the Tokyo 2020 Olympic and Paralympic Games• Supporting measures to prevent dengue fever in communities neighboring the plant (awareness activities, spraying
insecticide, cleaning activities, etc.)¥1,620 million• Undertaking a water supply equipment installation project for communities neighboring the plant• Popularizing organic rice cultivation among communities neighboring the plant with the help of technical experts
2
In the Philippines we are continuing to provide support through SDMP.

1 Investment in infrastructure and support services are non-commercial and provided free of charge.
2 SDMP: Social Development and Management Program, conducted by a company for the welfare of residents living in the vicinity of its operating area

Main Initiatives
Model Project for Dialogue and Collaboration
Local issues vary from region to region, and we believe it is importantto understand and resolve the issues facing each region through dialogue with the local community.
The Ome District Division and the Tama University Research Institutecollaborated to conduct a model project for dialogue and collaboration
called the Localized Contribution Survey. The purpose of this survey was
to identify local issues through research, and to develop, operate, andevaluate our unique program that contributes to solving these issues.
The initiatives include interviews with local governments andneighboring companies and their employees, holding panel discussions and workshops with local stakeholders under the title of
PROJECT OME, followed by the establishment of a Social Contribution
Promotion Committee at the Ome District Division. In addition, regular collaborative meetings with local social welfare councils and government officials have been established to explore issues.
Going forward, the Ome District Division will involve its employees in
the formulation of the OME VISION and other activities to foster a senseof ownership and create concrete results with local stakeholders. In addition, the model projects implemented at the Ome District Division will be

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

implemented at other business sites to contribute to the sustainable development of local communities by resolving issues faced by those communities.

Establishment of Scholarships in Japan
As one of the measures to support the nurturing of the next generation, in FY2023 we established the JEES-SMM Regional Contribution
Scholarship within the Japan Educational Exchanges and Services(JEES) based on our donation to support students who are willing tocontribute to the sustainable development of the regions where ourplants and mines are located and who need financial assistance.
This scholarship provides ¥100,000 per month, non-repayable until
graduation, to students who are motivated to contribute to the sustainable development of the Tama District of Tokyo, Hyogo, Ehime,
and Kagoshima Prefectures. We are awarding 20 scholarships toselected applicants in FY2023.
In addition, as a program to help scholarship recipients learn about
supporting local communities, we are considering the formation of acommunity among scholarship recipients and the implementation ofexperiences for scholarship recipients to participate in efforts to solve
real community issues in collaboration with the local community.

The SMM Group collaborates with local governments, NGOs, andother stakeholders to engage in dialogue with indigenous peoples
directly affected by its business activities.
In the Philippines, Coral Bay Nickel Corporation (CBNC) andTaganito HPAL Nickel Corporation (THPAL) have established organizations to carry out community development (Social Development) inaccordance with local laws and regulations, and are engaged in a
Social Development and Management Program (SDMP). Under thisprogram, based on dialogue with local residents, budgets are prepared for the categories of health, education, welfare, livelihood, etc.,
and free health checkups, medical treatment, agricultural assistance,
etc. are provided after obtaining approval from the local government.
In addition, we also separately budget for activities not included in
the SDMP, such as the construction of schools and assembly halls forindigenous peoples to educate them about their culture and uniquelanguages.
In Canada, together with our partner in the Cote Gold Project,
IAMGOLD Corporation, we have held ongoing dialogue with First
Nation peoples affected by it, as well as providing explanations
before gaining approvals, with the aim of helping them understandthe project. We have fostered relationships of mutual trust andunderstanding with the organization through participation in initiatives such as cultural workshops hosted by the organization, and as aresult, we were able to conclude an Impact Benefit Agreement.
Currently, we are working with indigenous groups and partners toconstruct a new lake with the same water surface area as the lake on
the proposed development site, and to conserve biodiversity byreleasing aquatic organisms from the existing lake into the newly
constructed lake and surrounding water system.

Implementation of In-house Education
The SMM Group conducts in-house education to ensure that
employees understand who indigenous people are and how theGroup should handle indigenous rights. This education will enable

employees to understand that it is an issue that concerns us all
through messages from top management and case studies fromwithin the Group. We are also continuing dialogues with experts1 on
indigenous people regarding content and receiving guidance toensure fairness in the materials.
Acting under the guidance of experts, we will continue our efforts
to further deepen Group employees’ understanding of indigenous
peoples and their traditions and cultures.
1 Keiichi Omoto (emeritus professor of anthropology at the University of Tokyo),Tomoaki Nishihara (professor at Seisa University), Eiichiro Noguchi (coordinator of
the NGO Taiga Forum)

Medium- to Long-Term Strategy for Value Creation

Japan

96

Vision for 2030

KPI Indicators

Grievance Mechanism: Membership in JaCER
SMM has joined the Japan Center for Engagement and Remedy on
Business and Human Rights (JaCER)2 established in 2022 as a founding member (regular member).
JaCER is an organization that aims to support and promote theredress of grievances of member companies from a professional
standpoint by providing a non-judicial Engagement and Remedy
Platform for grievance redress based on the United Nations Guiding
Principles on Business and Human Rights. They also established an
Advisory Board consisting of external experts and an Advisory andMediation Panel and Investigation Panel consisting of independent
expert individuals.
In addition to existing mechanisms such as the Whistle-blowing
System (Speak Up System)3, the Group will also utilize the platform
provided by JaCER to operate a more transparent and effective grievance (remedy) mechanism. The main scope of this platform is local
residents and indigenous peoples, and the supply chain (including
employees therein).
• Grievances received by JaCER about the Group: 0 (FY2022)
2 Japan Center for Engagement and Remedy on Business and Human Rights (JaCER):
https://jacer-bhr.org/en/index.html
P.117
3 Whistle-blowing System (Speak Up System)

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97Medium- to Long-Term Strategy for Value Creation

Special Feature 2
Initiatives of the Carbon Neutrality Committee

Vision for 2030

11 Human Rights in the Supply Chain
From the perspective of Business and Human Rights, the calls for companies to take strong measures to prevent human rights violations
throughout their supply chains are increasing. The SMM Group must work with its suppliers to establish sustainable supply chains to ensurethat its business activities do not have any adverse effects on human rights in its extensive supply chains.
Vision for 2030

A company that undertakes sustainable procurement across the supply chain

KPI Indicators

Goals

Promote sustainable procurement, particularly respon- 1. Responsible mineral sourcing
sible mineral sourcing
1) Establish a responsible mineral sourcing management system in line with international standards by the end of
FY2021
2) Maintain a record of zero mines, smelters, and refineries complicit in child labor or other infringements of humanrights in the supply chain
2. Sustainable procurement
1) Business partners that have received and agreed with the Sumitomo Metal Mining Group Sustainable Procurement
Policy: 100% by the end of FY2030
2) Establish a sustainable procurement management system in line with international standards by the end of FY2024
3) Continue implementing due diligence (DD)Main Results
Third-Party Audits at Smelters and Refineries
Subject Minerals
SilverCobaltNickelCopperAudit standards (issuingorganization)

RGG(LBMA)

RSG(LBMA)RMAP Cobalt(RMI)

JDDS(The Copper Mark)JDDS(The Copper Mark)

Audit start date

FY2012FY2018FY2020

FY2022

FY2023

Certification Body

LBMA

LBMA

RMI

RMI

RMI

Details of Activities in FY2022
In FY2022, the Carbon Neutrality Committee met six times.
The committee chair and the members shared issues for realizing carbon neutrality at the Group and formulated policies
on action to resolve the issues. More specifically, the committee established a policy in order to disclose information on
Scope 3 emissions and a policy on procurement of renewable power to reduce Scope 2 emissions.
The committee also deliberated on the appropriateness ofcapital investment to save energy and reduce greenhousegas emissions using the internal carbon pricing (ICP) system
proposed by each site and participation in the GX League1
among other topics.

Issues and policies on actions aimed at realizing carbon
neutrality Disclosure of Scope 3 emissions
 Procurement of renewable power Capital investment eligible for ICP in FY2023 budget SMM Group Green Metal concept Participation in GX League


Main
Topics ofDiscussion

1. Green transformation (GX) refers to the transformation of the entire economic andsocial system by shifting from a fossil fuel-based to a clean energy-based economy,society, and industrial structure. The GX League was established by the Ministry of
Economy, Trade and Industry as a forum under which a group of companies thatare taking on the challenge of transitioning to carbon neutrality as quickly as possible and leading GX with the inclusion of other stakeholders come together with
the Japanese government, universities and other educational institutions, financial
institutions and other players making efforts to realize GX to discuss GX and practice creating new markets.

WEB Official website preparing for the establishment of the GX League

Medium- to Long-Term Strategy for Value CreationGold

SMM established the Carbon Neutrality Committee in April 2022 to clarify the policy and path toward the realization of carbon neutrality that our Group should aim for, and to promote it more quickly and more stronglyGroupwide. The basic principle is that each business division, and each organization related to carbon neutrality,
should work together with the aim of having all parties involved actively engage in activities according to theirroles. The committee is chaired by the executive officer in charge of promoting carbon neutrality (Hideyuki
Okamoto, Executive Officer in charge of the Technology Division), with the Executive Officer in charge of the
Safety & Environment Control Department as deputy chair, and the General Managers of each division andrelated departments as the members, and they hold regular committee meetings.

https://gx-league.go.jp/en/

Main Initiatives
Initiatives Related to Responsible Mineral Sourcing

Initiatives Related to Sustainable Procurement

Examples of Initiatives

We undertake responsible mineral sourcing initiatives in line withmechanisms advanced by the international Responsible Minerals
Initiative (RMI)* to ensure supply chain transparency. This system aims
to ensure transparency in a more efficient manner in the supply
chain from mines that are upstream to finished product manufacturers downstream by starting from smelters and refineries, which are
relatively few in number.
Downstream from the smelters and refineries, a standardized survey is extended by customer companies for the purpose of identifying
the smelters and refineries that produced the minerals used in theirproducts. We are working to ensure unified responses to these surveys
across the SMM Group, and in FY2022, we responded to 330 surveys.
Upstream of smelters and refineries, we regularly undergo thirdparty, international standards- based audits of responsible mineralsourcing mechanisms at our smelters and refineries, covering matters
including risk assessments of suppliers. Since audit standards varyfrom mineral to mineral, we work to ensure that each standard is met
by conducting due diligence, developing internal systems and regulations, and providing internal training.
Additionally, when the Smelting & Refining Business selects a newcompany as a supplier, we assess that company’s environmental management, including management of water resources and tailings dams.

The SMM Group aims to build a sustainable supply chain for its major
suppliers (including local suppliers) through the following initiatives.
-R equesting for consent to the procurement policy: In FY2020, we
asked major business partners to consent to the procurement policy, in response to which approximately 99% of those business partners have stated their consent.
-R equest for responses to questionnaire on sustainable procurement: We prepared a questionnaire on sustainable procurement in
FY2021 and sent this questionnaire to our major suppliers who consented to our procurement policy, and received responses from98% of our suppliers. The questionnaire responses reveal that S, A,
and B evaluations (the highest of the five levels of evaluation)accounted for about 85% of overall evaluations, confirming thatmany business partners are advancing initiatives related tosustainability.
- E xchange of opinions with suppliers on sustainability: We
selected five of our major suppliers to exchange opinions on sustainability (especially concerning business and human rights) in
FY2022 based on their responses to a survey on sustainable procurement conducted in FY2021. In addition to hearing about theiractual situations, we exchanged opinions about effective activities
while introducing the initiatives of our Group.

Participating in GX League*Responsible Minerals Initiative (RMI): An international initiative on the responsible
sourcing of minerals by the Responsible Business Alliance (RBA), an organization
founded in 2004 for the purpose of promoting a common code of conduct in theworld’s electronic equipment industry.

Based on our Corporate Philosophy, which states, the SMM Group“shall, through the performance of sound corporate activities and thepromotion of sustainable co-existence with the global environment,seek to make positive contributions to society and to fulfill its responsibilities to its stakeholders, in order to win even greater trust,” we formulated the Vision for 2030 in March 2020. As part of our vision, we
identified climate change as a key issue, and we are aiming to become“A company that actively undertakes climate change countermeasures,by reducing emissions and stably supplying products contributing to a
low-carbon society, a future with zero greenhouse gases (GHGs).”
As the concept behind the GX League aligns with the Group’s stanceon realizing carbon neutrality, the Carbon Neutrality Committee
decided to join the GX League in April 2023 after endorsing the GX
League Basic Concept2 in 2022. In terms of its activities in FY2023, theCarbon Neutrality Committee will discuss the Group’s emission reduction targets and a roadmap (transition strategy) for realizing carbon
neutrality by 2050 in relation to the emissions trading trial starting in
the GX League from FY2023, thereby contributing to the GX League’s
activities.
2. See the following website for details on the GX League Basic Concept (Ministry of
Economy, Trade and Industry)

Initiatives Required of GX League Member Companies
on which SMM is Taking Action
Initiatives to reduce emissions (voluntary emissions trading and disclosure of status)F ormulate reduction targets for FY2030 and interim targets(FY2025) for Scope 1 and 2 emissions in Japan under the emissions trading scheme (GX-ETS) and publish progress on reduction targets
 Publish a 2050 Carbon Neutrality Declaration, formulate thetransition strategy toward carbon neutrality, and publish
progress

SMM’s View of the Effects of Participating in the GX League
In addition to enabling wide-ranging dissemination of
the Company’s own GX-related initiatives, thereby gaining the trust of suppliers, customers, financial institutions,investors, and others, the following effects are expected.
 sing knowledge gained through GX League activities inUaccelerating the Company’s own climate change initiatives
 Securing an advantage in fund procurement, including ESG
investment and green finance, etc.
 Enhancing environmental reputation and brand value Acquiring experience related to the emissions trading scheme
ahead of full-scale operation (from FY2026)
WEB https://www.meti.go.jp/english/press/2022/0201_001.html

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