Integrated Report 2023
Sumitomo Metal Mining Co., Ltd.

The report is printed using non-VOC ink.

Integrated Report 2023

At a Glance (FY2022)

Three Core Businesses
Net Sales(consolidated)

More than

430 years of history

Profit before Tax(consolidated)

1,423 billion¥

229.9 billion¥

The second longest history of Japan’slisted companies

Mineral Resources Business

P.54-59

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

Equity Ratio

60.3%
Due to the nature of our business, we aim
to maintain an equity ratio of 50% ormore as a sound financial position thatcan withstand temporary cash outflows.

Employees(consolidated)

7,330

Dividend Payout
Ratio

Total Assets

2,700 billion¥

Our businesscountries and regions

35.1%

Manufacturing Bases

Cumulative amount of gold
produced from Hishikari Mine

264 tons,

No. 1 in Japan

Global Class 1 nickel
interest production

NO.

5* Source: Research by SMM

P.60-65

Main Products

 opper, Gold, Silver, Electrolytic Nickel, Electrolytic Cobalt, Ferronickel, Palladium,C
Chemical Products

Materials Business

P.2-3

Japan’s only
operating gold mine

Smelting & Refining BusinessFor over 430 years since the start of our copper smelting and refining business in 1590, we have stably supplied a variety 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 toachieve the successful recovery of nickel from low-grade nickel oxide ore
using the High Pressure Acid Leach (HPAL) method on a commercial basis.

7 Mines
8 Smelters and Refineries
20 Materials Plants

14Gold and Silver Ore, Copper Concentrates, Copper, Gold, Molybdenum

Nickel-based
cathode materials forsecondary batteries

Top classglobal share* Source: Research by SMM

P.68-73

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

Main Products

Battery Materials, Thick Film Paste, Powder Materials, Crystal Materials, Thin Film
Materials, Magnetic Materials, Package Materials, Oil Refining Catalysts, Automotive
Catalysts, Autoclaved Lightweight Concrete, Lubricants(As of March 31, 2023)

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SMM Group Overview (As of May 1, 2023)

Group Companies
SMM Korea Co., Ltd.

Cote (in development) (36.7225%)52
Equity-method Affiliates 13

Consolidated Subsidiaries

Jinlong Copper Co., Ltd. (27.1%)
Morenci (25.0%)

Shanghai Sumiko Electronic Paste Co., Ltd. (69.0%)
Sumico Lubricant Trading (Shanghai) Co., Ltd.
Taiwan Sumiko Materials Co., Ltd.

Dongguan Sumiko Electronic Paste Co., Ltd. (85.0%)
SMM Vietnam Co., Ltd.

 Nickel Asia Corporation (26.5%)
Coral Bay Nickel Corporation (84.375%)

Mineral Resources Segment
Copper  Gold

Taganito HPAL Nickel Corporation (75.0%)

Smelting & Refining Segment
Copper  Nickel  Materials Segment
Major Sites of Materials Business

Cerro Verde (16.8%)
FIGESBAL SA (25.5%)
Northparkes (13.3%)

 Consolidated subsidiaries Sumiko Technical Service Co., Ltd.

Sumitomo Metal Mining Co., Ltd.

 Sumiko Techno-Research Co., Ltd.
 Sumitomo Metal Mining Engineering Co., Ltd.

Asia S umitomo Metal Mining America Inc. (U.S.A.)

Smelting & Refining

Mineral Resources SMM Morenci Inc. (U.S.A.) Acids Co., Ltd.

 Cordillera Exploration Company Inc. (Philippines) SMM Gold Cote Inc. (Canada)

Smelting & Refining S umitomo Metal Mining Canada Ltd. (Canada) SMM Exploration Corporation (U.S.A.) Jinlong Copper Co., Ltd. (China) Hyuga Smelting Co., Ltd.

 Sumitomo Metal Mining Management (Shanghai)Co., Ltd. (China) Mitsui Sumitomo Metal Mining Brass & Copper Co.,Ltd.

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

Materials

 Coral Bay Nickel Corporation (Philippines) SMM Precision Co., Ltd.

 Nickel Asia Corporation (Philippines) N.E. Chemcat Corporation Taganito HPAL Nickel Corporation (Philippines) Ohkuchi Electronics Co., Ltd.

 Sumitomo Metal Mining Philippine Holdings
Corporation (Philippines) Ohkuchi Materials Co., Ltd.

Candelaria (16.0%)

 SMMA Candelaria Inc. (U.S.A.) Sumiko Resources Exploration & Development Co.,Ltd.

 Sumiko Logistics Co., Ltd.

Figures in parentheses indicate percentage interest.
Companies with no percentage written are 100% owned.

Mineral Resources Japan Irradiation Service Co., Ltd.

 Shisaka Smelting Co., Ltd.

Quebrada Blanca (in development) (25.0%)

North America

Mineral Resources

 MS Zinc Co., Ltd.

 Other Major Site / Group Company

Ojos del Salado (16.0%)

 Equity-method affiliates

Japan

Other(China) GRANOPT CO., LTD.

Materials

 Sicoxs Corporation

 Dongguan Sumiko Electronic Paste Co., Ltd. (China)

 Shinko Co., Ltd.

 Shanghai Sumiko Electronic Paste Co., Ltd. (China) Sumiko Energy Materials Co., Ltd.

 Sumico Lubricant Trading (Shanghai) Co., Ltd. (China) Sumiko Kunitomi Electronics Co., Ltd.

 Granopt Optics Trading (Shenzhen) Co., Ltd. (China) Sumico Lubricant Co., Ltd.

 Shinko Trading (Zhong Shan) Co.,Ltd. (China) Sumitomo Metal Mining Siporex Co., Ltd.

 Taiwan Sumiko Materials Co., Ltd. (Taiwan)

 Niihama Electronics Co., Ltd.

 SMM Korea Co., Ltd. (South Korea)

 Nippon Ketjen Co., Ltd.

 SMM Vietnam Co., Ltd. (Vietnam)

 S umitomo Metal Mining Arizona Inc. (U.S.A.) SMM Resources Inc. (Canada)

Other Regions Igeta Heim Co., Ltd.

Sumiko Kunitomi
Electronics Co., Ltd.

SMM Precision Co., Ltd.
GRANOPT CO., LTD. (51%)
Shinko Co., Ltd.

Mineral Resources Compania Contractual Minera Candelaria (Chile) Compania Contractual Minera Ojos del Salado (Chile) S umitomo Metal Mining Chile LTDA. (Chile)

Sumiko Energy Materials Co., Ltd.
Harima Refinery SMMQB Holding SpA (Chile) SMM Quebrada Blanca SpA (Chile) Quebrada Blanca Holdings SpA (Chile) S ociedad Minera Cerro Verde S.A.A. (Peru) S umitomo Metal Mining do Brasil LTDA. (Brazil)
 S umitomo Metal Mining Oceania Pty. Ltd.
(Australia)

 S MM Cerro Verde Netherlands B.V. (Netherlands)
NagoyaBranch Sumitomo Metal Mining Peru S.A. (Peru)Ome District Division Materials Laboratories

Ichikawa Research Center

Osaka Branch
Hyuga Smelting Co., Ltd.
(60%)

H
 ead OfficeSumico Lubricant Co., Ltd.

 SMMCV Holding B.V. (Netherlands)

N.E. Chemcat Corporation (50%)

Smelting & Refining FIGESBAL SA (New Caledonia)

Other Besshi-Niihama District Division
Toyo Smelter & RefineryNiihama Nickel Refinery
Shisaka Smelting Co., Ltd.
Isoura Plant
Niihama Electronics Co., Ltd.
 Niiham Research Laboratories Battery Research Laboratories

 ishikari MineH
Ohkuchi Electronics Co., Ltd.
Ohkuchi Materials Co., Ltd. (95%)

Nippon Ketjen Co., Ltd. (50%)
Sumitomo Metal Mining Siporex Co., Ltd.
Sicoxs Corporation JCO Co., Ltd.
* The location of the head office is shown for each group company in Japan.

2

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Introduction

Special Features

Special Feature 1: Digital Transformation (DX) at the SMM Group  

P.78

Accelerating DX

SMM takes on

We are accelerating Group-wide DX through means including the establishment of a Digital Transformation Committee
in April 2021 and the launch of a Digital Transformation Department in July 2022 as an organization dedicated to implementing DX-related measures. Through these, we will integrate the separate DX-related initiatives that have been carriedout in different areas of the Group, improving our Group-wide DX infrastructure and strengthening competitiveness.

change andchallenges
Special Feature 2: Initiatives of the Carbon Neutrality Committee  Our 2021 3-Year Business Plan focuses on measures to be taken
to respond to, and resolve, the three major issues impacting ourbusiness operations in recent years: the accelerating transition tocarbon neutrality, adaptation to digital transformation (DX), andincreasing difficulty of securing human capital. These are allmaterial issues that cannot be resolved merely by continuing earlier means of response. Moreover, if we were to “stumble” in theearly stages, failing to live up to the expectations held of us by
our stakeholders, we could suffer a loss of competitiveness andeventually be shunned by the market. The central theme of our2021 3-Year Business Plan is “Renewed Challenge for Change.”
Here, we view “change” not as modification in the sense of making modest changes to mechanisms long in place but rather assomething altogether new: total reform, under which our challenge begins.
This publication brings together “Special Feature” pages that
address the three issues of carbon neutrality, DX, and human capital strategy.

4

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

P.99

Addressing carbon neutrality
To strengthen our ability to take action against climate change and to accelerate our initiatives aimed at
reducing greenhouse gas (GHG) emissions, in 2022 we launched the Carbon Neutrality Committee.

Special Feature 3: Human Resources Strategy Transformation and Tradition – Preservation through Transformation –  

P.128

Human capital strategy
Securing, developing and utilizing human capital have become extremely critical issues for ensuringcorporate survival. Today we are undertaking a variety of measures with a focus on intangible
aspects to resolve these issues: for example, we are reviewing our personnel systems, raising
employee awareness, and enhancing our educational programs.

SUMITOMO METAL MINING CO., LTD.

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Introduction

Contents

		At a Glance Continuing to Support Value Creation1	Three Core Businesses

100	Corporate Governance2	SMM Group Overview

112	Round-Table Discussion with Outside Directors Introduction

We asked our outside directors what their role is in creating an
open and vibrant organizational climate and securing,
fostering, and utilizing powerful human capital.

4	Special Features
6

Integrated Report 2023 Concepts

Contents

114	Tax Governance Vision for the SMM Group8	The Sumitomo Business Spirit and the SMM Group
Corporate Philosophy
9	Long-Term Vision

116	Compliance120	Risk Management
123

Quality Assurance

128

Special Feature 3 Human Resources Strategy		Transformation and Tradition–PreservationthroughTransformation–

10	Vision for 2030
12	Vision for 2030 – Formulation Approach13	Message from the President The SMM Group’s System for Value Creation
20	Our History of Value Creation
24	The Global Non-Ferrous Metal Industry and the SMM
Group
28	Value Creation Process
30	Value Creation Process (Business Model) Explanation
32	The SMM Group’s Capital:
Seven Competitive Strengths Cultivated by the
Sumitomo Business Spirit
34	Risks and Opportunities
36	Financial and Non-Financial Highlights

134	Directors and Audit & Supervisory Board Members Data Section136	FAQ
138	Glossary142	Eleven-Year Financial Summary
144	Consolidated Statements of Financial Position/
Consolidated Statements of Profit or Loss/
Consolidated Statements of Comprehensive Income
148	Consolidated Statements of Changes in Equity
151	Consolidated Statements of Cash Flows153	Corporate Data and Investor Information
154

Emphasizes explanations of the initiatives in the first year of the 2021 3-Year Business Plan which
has the theme of Renewed Challenge for Change
The Integrated Report 2023 is composed of five chapters: “Vision for the SMM Group,” “The SMM Group’s System for
Value Creation,” “Medium- to Long-term Strategy for Value Creation,” “Continuing to Support Value Creation,” and “DataSection.” We have strived to make the content more comprehensive yet easy-to-read for our stakeholders, and we haveenhanced the information to take into account the perspectives of investment decisions regarding our stock.
In the special feature, we introduce Renewed Challenge for Change, focusing on the three material issues of the2021 3-Year Business Plan: carbon neutrality, digital transformation (DX), and human capital strategy.
To provide stakeholders with a better understanding of our human capital initiatives, we have included a moredetailed description in the special feature on our human capital strategy, which has been a topic of growing interest
among our stakeholders in recent years, as well as a roundtable discussion with our outside directors.
In addition, up to now copper refining technology has not been covered very much, so we have put together information on this in the column Technological Changes at the Toyo Smelter & Refinery, which focuses on the Toyo
Smelter & Refinery’s efforts to increase production volume through the accumulation of technology.
Moreover, we have clarified the division of roles of reports by disclosing detailed sustainability-related data in a
Sustainability Report to be issued from this year. For this Integrated Report, we included material sustainable information and further improved the report’s readability.
(Sustainability Report 2023 (https://www.smm.co.jp/en/sustainability/library/sustainability_report/))Throughout, the report expresses the Group’s high goals and commitment to value creation and our long-term
vision of becoming the world leader in the non-ferrous metals industry. And along with showing our medium- to longterm strategy to create value, the report also shows SMM’s commitment to sustainability.

Attestation of Validity Medium- to Long-Term Strategy for
Value Creation
40	Review of Past 3-Year Business Plans
42	Strategy and Resource Allocation
54	Mineral Resources Business60	Smelting & Refining Business66	Technological Changes at the Toyo Smelter & Refinery

68	Materials Business
74	Research & Development
77	Battery Recycling

78

Special Feature 1	Digital
Transformation (DX)at the SMM Group82	Sustainability Management at the Sumitomo Metal
Mining Group86	Vision for 2030, Material Issues, KPIs (Indicators andGoals)
1 Effective Use of Non-Ferrous Metal Resources88
2 Climate Change
89
3 Significant Environmental Accidents
92
		4 Biodiversity
5 Employees’ Occupational Health and Safety
93
6 Diverse Human Resources94
		7 Development and Participation of Human Resources
8 Engagement with Stakeholders
95
9 Co-Existence and Mutual Prosperity with Local
96
Communities
10 Rights of Indigenous Peoples
97
11 Human Rights in the Supply Chain
98

99

6

Special Feature 2 Initiatives of the Carbon Neutrality		Committee

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Integrated Report 2023

Editorial Policy

Scope of the Report

While interest in social and environmental issues has been growing in recent
years, with the SDGs garnering attention, companies are expected not only tocreate economic value but also to work to resolve these social and environmental issues.
Since 2016, we have published these integrated reports to serve as a tool for
dialogue with stakeholders inside and outside the Group and to help stakeholders attain a deeper understanding of the SMM Group’s initiatives toward sustainable growth and maximization of corporate value.
In editing this Sumitomo Metal Mining Integrated Report 2023, the eighth edition of our Integrated Report, we have reviewed the articles that have been accumulated so far focusing on priority and, in conjunction with the publication of
the Sustainability Report, we have carefully selected particularly important information on sustainability to be disclosed.
We have also included three special feature articles on the three material issuesof the 2021 3-Year Business Plan that are of great interest to our stakeholders: carbon neutrality, digital transformation (DX), and human capital strategy. We hopethese articles will help you understand our efforts to address each of these issues.
In this report, CBNC and THPAL are acronyms for Coral Bay Nickel Corporation
and Taganito HPAL Nickel Corporation, respectively.
Also, unless otherwise stated, the term “ton” refers to a metric ton.

Sumitomo Metal Mining Co., Ltd. (SMM)
The Sumitomo Metal Mining Group SMM and consolidated subsidiaries
Economic and Environmental Topics SMM, consolidated subsidiaries andequity-method affiliates
Social Topics SMM and consolidated subsidiaries
Publication Date
September 2023 Next scheduled publication: November 2024 (Previous publication: November 2022)
Period Covered(Some activities before or after the following periods have also been included)
Japan: April 1, 2022–March 31, 2023
Overseas: January 1, 2022–December 31, 2022

Inquiries
Public Relations & Investor Relations Department, Sumitomo Metal Mining Co., Ltd.
11-3, Shimbashi 5-chome, Minato-ku, Tokyo 105-8716, Japan
Tel: +81-3-3436-7705 Fax: +81-3-3434-2215

Referenced Guidelines

Disclaimer
The forward-looking statements in this integrated report, including
business result forecasts, are based on information available to theCompany and on certain assumptions deemed to be reasonable as ofthe date of release of this report. Actual business results may differ substantially due to a number of factors.
* This document is the English version of the Japanese original.

In compiling this Report, we have referred to the International Integrated
Reporting Framework1 and the Guidance for Collaborative Value Creation2 to provide an easy-to-understand explanation of the capital and business model usedin the value creation process, and the value provided to stakeholders.
1. An international corporate reporting framework from the International Financial
Reporting Standards Foundation (IFRS) that tells a company’s short-, medium-, andlong-term value creation story.
2. Guidance compiled by the Ministry of Economy, Trade and Industry (METI) to help
companies and investors deepen mutual understanding through information disclosure and dialogue, and to encourage action toward value co-creation.

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Vision for the SMM GroupThe Sumitomo Business Spirit and the SMM Group Corporate Philosophy

The Sumitomo Business SpiritLong-Term Vision

Become the world leader in the non-ferrous metals industry
Vision for the SMM Group

Article 1

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

Sumitomo shall manage its activities with foresight and flexibility in order to cope
effectively with the changing times. Under no circumstances, however, shall it pursue
easy gains or act imprudently.
(Quoted from the Sumitomo Goshi Kaisha Administrative Regulations, named “Summary of Business Operations”, formulated in 1928)

As the world leader in the non-ferrous metals industry we are aiming to ave a global presence in terms of mineral resource interests and metal production volumesH(= be in the global top five) ave leading technology and a unique business model that cannot be easily emulated byHother major mineral resource companies

Grow sustainably and stably produce a certain amount of profitActively tackle social issues such as the SDGsHave employees work with spirit
Targets of our Long-Term Vision

SMM Group Corporate Philosophy
Sumitomo Metal Mining Co., Ltd. (SMM), in accordance with the Sumitomo Business Spirit, shall, throughthe performance of sound corporate activities and the promotion of sustainable co-existence with theglobal environment, seek to make positive contributions to society and to fulfill its responsibilities to its
stakeholders, in order to win ever greater trust.

Nickel (Ni)Copper (Cu)Annual production capacity ofAnnual production interest of

150

300

kt

kt

Gold (Au)Materials

Participation in new mine
operations through theacquisition of superior interest

Annual profit before tax of

SMM shall, based on respect for all individuals and recognizing each person’s dignity and value, seek to bea forward-minded and vibrant company.

25 billion

Long-Term Vision

Becomethe World Leader
in the Non-Ferrous
Metals Industry¥

through portfolio management

ProfitCorporate value

Annual profit attributable to owners of parent of150¥

SMM Group Management Vision

Vision for2030

By improving technical capabilities, we shall fulfill our social responsibilities as a manufacturing enterprise.
Based on the principles of compliance, environmental protection and operational safety, SMM Group shallpursue maximum corporate value through the securing of resources and the provision of high-quality
materials such as non-ferrous metals and advanced materials via its global network.

billionGrowth potential

Vision for2020
P.10-11

Sustainability

SMM Group Corporate Philosophy, SMM Group Management Vision

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Vision for the SMM Group

Vision for 2030

Overview of Vision for 2030

Material Issues and Their Background

VisionVision for the SMM Group

Drawing on its corporate philosophy and management vision, the SMM Group will expand its growth potential
and sustainability by securing resources and providing non-ferrous metals, battery materials, advanced materials,
and other high-quality materials in an effort to enhance its company value and achieve its long-term vision of
becoming the world leader in the non-ferrous metals industry.
We formulated Vision for 2030 as a milestone toward the realization of these initiatives, which will also contribute to the formation of a sustainable society.

1 Effective Use of Non-Ferrous Metal Resources
A company that generates resources through high technological capabilities
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 totechnical obstacles and through the development of recycling technologies.

2 Climate Change
Vision for 2030 specifies the concrete KPIs and deadlines
toward achieving our long-term vision of becoming theworld leader in the non-ferrous metals industry.
Based on our assessments and reflections regarding Vision
for 2020, we sorted out the issues we must respond to andthe ones we are expected to solve as issues that must be
addressed by our Group, including social issues such as the

SDGs which have the same target year. As a result, we identified 11 material issues.
In addition, Vision for 2030 and KPIs were deliberated forthese 11 material issues, and formulated and released in
March 2020.
* Material issues, Vision for 2030 and KPIs:

See P.86-87

 company that actively undertakes climate change countermeasures, by reducing emissions and stably supplying products contributingA
to a low-carbon society, a future with zero greenhouse gases (GHGs)
Society’s demand for companies to reduce greenhouse gas (GHG) emissions has increased dramatically, and the business risks associated with climatechange 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 the near-infrared absorbing materials both produced by our Group, are expected to contribute to the reduction of GHG emissions.

3 Significant Environmental Accidents  

4 Biodiversity

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

Relationship with the SDGs

5 Employees’ Occupational Health and Safety
Recognizing the close affinity between the SDGs and ourGroup’s corporate philosophy and vision, we formulated our
Vision for 2030 with the SDGs kept firmly in mind. The resultsof our work to evaluate issues and connect them with SDG

targets are shown in the diagram below. We set the 12th SDG,
“responsible consumption and production,” as our mostimportant goal, as this goal indicates our approach toward allissues and directly connects to our management vision.

A company where all employees work together with safety first the priority in a comfortable working environment as well as safe facilities and operations
It is the responsibility of management to prevent work-related accidents and illnesses, provide a safe, healthy and comfortable 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.

6 Diverse Human Resources  Diagram of Relationship with the SDGs

7 Development and Participation of Human Resources

A company where all employees can take a vibrant and active part5

1

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 development of DX, it is amanagement challenge to develop human resources who can think and act on their own initiative based on their expertise.

3

2

Sustainability

Growth potential

8

9 10 11

The numbers 1 to 11 in the diagram indicate material issues in Vision for 2030.

SUMITOMO METAL MINING CO., LTD.

9 Co-Existence and Mutual Prosperity

10 Rights of Indigenous Peoples

 company that is appreciated andAunderstood to be the world leader in
non-ferrous metals

 company that contributes to regionalAdevelopment and earns trust as amember of the local community

 company that understands andArespects the traditions and culture ofindigenous peoples

with Local Communities

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 oftrust 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 and engage in a continuing dialogue
prior to development. It is then necessary to proceed carefully to prevent such impacts of development.

4

10

8 Engagement with Stakeholders

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6
See P.86-87

7

11 Human Rights in the Supply Chain
A company that undertakes sustainable procurement across the supply chain
As for Business and Human Rights, the calls for companies to take strong measures to prevent human rights violations throughout their supply
chains are increasing. It is necessary for the SMM Group to construct sustainable supply chains in collaboration with business partners to prevent
our business activities from having negative impacts on human rights along our diverse supply chains.

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Vision for the SMM Group

Vision for 2030 – Formulation Approach

Message from the President

Vision for the SMM GroupTo formulate Vision for 2030 and achieve sustainable value creation, we undertook a full change revision of the Vision for 2020. The
revision addressed issues remaining from Vision for 2020, the changes to the needs of stakeholders (our response to climatechange, business and human rights, etc.), changing trends in the materials industry with the rapid development of digitalization,and connections to the SDGs, which have the same target year of 2030. As shown in the figure below, we underwent an extensive
process of deliberations that involved the input of everyone from officers to employees, as well as outside experts as needed.

Identification of sustainability issues

STEP 1

From April 2018, having summarized outlooks for conditions in 2030 by the OECD and other organizations and international guidelines such as ICMM guidelines and GRI Standards, and having identified 89
sustainability issues, we worked to connect these issues with closely related SDG targets.

Identification of material issues through evaluation of the materiality of sustainability issues

STEP 2

To identify material issues from the identified 89 issues, from October 2018 we began evaluations on
two axes: evaluation by CSR subcommittees1 from social perspectives and evaluation by business divisions from business perspectives.
As standpoints for evaluation, we set three points—(1) degree of impact on society, (2) risks thatthreaten to increase if not actively addressed, and (3) opportunities gained if actively addressed—andevaluated these on a five-step scale.
We further held study sessions for a total of 21 young managerial track employees in general positions and 20 factory leaders in the Besshi District, and used their opinions as references in examinations
by the CSR subcommittees.

Examination of the vision and KPIs

STEP 3

From April 2019, we began examination of the vision and of specific KPIs in CSR subcommittees corresponding to the 11 material issues. In July 2019, based on the examination by the CSR subcommittees,
we held deliberations by officers, and carried out final examinations through the CSR Committee2(chaired by the president).

Akira Nozaki
President andRepresentative Director

Formulation and release of Vision for 2030

STEP 4

In December 2019, the CSR Committee convened to issue its approval of Vision for 2030 and its KPIs,
which, following resolution by the Board of Directors, led to formulation and announcement of thevision in March 2020.

1. Current Sustainability Committee
2. Current 7 Sustainability Subcommittees

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Vision for the SMM Group

Message from the President

Continuous Pursuit of Changes
A Company Grounded in Production
For more than 430 years, as a company grounded in production the SMM Group has embraced a social responsibility to provide customers with a stable supply of products indispensable to people’s lives, and this social commitment has been the steady driving force behind our business operations. Throughout its long history, the Company
has always met the challenge of flexibly responding to changing times. All too frequently, dramatic changes havetaken place in SMM’s business environment, yet at all times the Company has weathered even the roughest circumstances by continuously pursuing internal changes. “Change” is thus one of the constant characteristics defining the
SMM Group’s history.
As a company grounded in production, there are many aspects that must be maintained at all times. Nothingcan be maintained, however, merely by aimlessly repeating again and again what was done in the past. In all facetsof business – including how business is operated, its organization and systems, how work is carried out, etc. – initial
purposes are lost and original functions erode in importance with the passage of time. Simply maintaining the status quo inevitably leads to atrophy: ongoing changes are necessary in order to retain what needs to be retained.
The SMM Group is committed to actively and dynamically implementing changes to enable it to fulfill, long into the
future, its inherent social responsibility as a company grounded in production.

Creating Workplace Environments Conducive to Pursuit of Changes
To support our quest to achieve workplace environments in which employees can work vibrantly and innovatively,
in fiscal 2021 we launched a program of renewal at the Company’s Head Office. This agenda was completed in April
2023. By achieving a more creative workstyle and serving in a role that promotes changes, the Head Office will takethe lead in pursuing greater value of the SMM Group as a whole, paving the way toward becoming the world
leader in the non-ferrous metals industry.
Outside the Head Office, the Company is looking to construct a new dormitory for employees in the Besshi
District and to renovate the general office in the Harima District. In addition, we intend to create employee housing
at affiliated companies, proactively carry out renovations at workplaces, improve employee productivity and creativity, secure young human capital, and create growth opportunities. Since August 2022, we have also been taking
steps to promote Health Management.

An Open and Vibrant Organizational Climate
An open and vibrant organizational climate is indispensable for achieving changes and continuously taking up newchallenges targeting growth. Being “open and vibrant” is a value closely aligned with the Sumitomo Business Spirit,
but up to now the vagueness of this wording resulted in a wide range of interpretations. To remedy this shortcoming, we are now working to redefine the “open and vibrant organization” we aspire to, and to win clear understanding among all employees. Our goal is to nurture a culture and climate in which, rather than seeking to avoid
mistakes or failures, employees will feel open and vibrant and continuously take up new challenges.

2

The Sumitomo Business Spirit
At the start of 2023, I notified employees throughout the Group of the Company’s policies for the new year. One is aprecept incorporated into the Rules Governing the House of Sumitomo set down during the Meiji Period (18681912): “Sumitomo shall manage its activities with foresight and flexibility in order to cope effectively with thechanging times.” These words constitute a philosophy that is still as relevant today as back then: Sumitomo must at
all times be keenly alert to the shifting trends of society that come with changing times, and, never resting on its
laurels, must continually respond to the circumstances presented to it. I believe that today we need to renew ourawareness of this time-tested philosophy and spirit, and in undertaking the Company’s management I aim to
respond as necessary to the needs of every era through pursuit of ongoing changes.

Progress of the 2021 3-Year Business Plan’s 4 Challenges
Our 2021 3-Year Business Plan, which got underway in fiscal 2022 with a central focus on “changes,” incorporates
four major challenges.
Challenge 1

Long-Term Vision and “Vision for 2030”
The SMM Group’s Long-Term Vision calls for the Company to become “the world leader in the non-ferrous metals
industry.”
To achieve this long-range goal, we believe SMM must satisfy the following defining qualifications: have a global
presence; possess leading technologies; own a unique business model; produce profits of a certain amount; tackle
social issues such as the SDGs; and be a company where employees work vibrantly and with spirit.
In our “Vision for 2030,” which we formulated in 2020, we identified 11 “Material Issues” of major importance that
the Company needs to address from both the social and business perspectives. Included among these issues areseveral that are garnering increased attention in years, especially climate change, biodiversity, human resources,and human rights. Going forward, we will continue our quest to become the world leader in the non-ferrous metals
industry by firmly addressing these issues through ongoing pursuit of positive changes.

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Vision for the SMM Group1

Increasing corporate value: Promotion of large-scale projects

Expanding production capacity for battery cathode materials
Aiming to increase our production capacity in battery cathode materials by 2,000 tons per month by the end of fiscal 2025, we are currently making steady progress in construction of a new plant. We have also begun securing anddeveloping the personnel who will be needed when the plant goes onstream, and we are taking steps to improve
our production infrastructure through measures such as reducing our inventories. We have also introduced the
Toyota Production System at some of our manufacturing bases. Because demand for battery cathode materials is
projected to continue expanding going forward, to increase our production capacity we are presently considering
making investments at the optimal times and in optimal locations. We also continue to mull a new mass production process for battery cathode material of lithium iron phosphate (LFP).

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Vision for the SMM Group

Message from the President

Vision for the SMM Groupdigitalization and decarbonization. In silicon carbide (SiC), we continue preparations toward achieving mass production for use in vehicles in 2025. In addition, operations in CWO®, our near-infrared absorbing material expectedto achieve further growth in the years ahead, are getting underway in earnest, and through X-MINING®(crossmining), our information messaging website, we are accelerating activities in partnership with our customers tocreate new businesses based on jointly developed ideas.
Challenge 3

Quebrada Blanca 2 (QB2) Project
In March 2023 we began production of bulk copper concentrate with feeding of ore into the key facilities. Presently,
we are gradually increasing the facilities’ operating ratios in the run-up to achieving full production by year’s end.
Although construction was delayed amid the pandemic and investment outlays have increased beyond initial projection, once QB2 achieves full production, SMM’s copper interest will reach 280,000 tons per year, which will comevery close to the target of 300,000 tpy which we set in our Long-Term Vision. As the QB2 project is expected to haveoutstanding cost competitiveness and to generate increased mineral resources in the future, we are greatly looking
forward to its completion.

Côté Gold Project
Construction work is proceeding generally on schedule in preparation for the launch of production early in 2024.
Here too, construction delays and investment cost increases were incurred mainly under the impact of the pandemic, but because high expectations are held for expansion in resources, including in the surrounding areas, weare looking forward to nurturing this excellent project in partnership with IAMGOLD Corporation.
Challenge 2

Improving core business sustainability

To strengthen the value chain of collaboration among our three core businesses (nickel to battery materials), which
is our corporate strength, we are taking steps to secure nickel resource supplies and implementing measures toenhance the links among our businesses. To secure new sources of nickel ore, we are accelerating our studies ofpotential new projects to replace the Pomalaa Project which we decided in April 2022 not to pursue any further. As
of now, we have pared down the candidates to a few projects mainly around the Pacific Rim. We are also working toprocure diverse materials: for example, by securing intermediate materials currently on the market. In addition, at
existing smelting locations at Coral Bay Nickel Corporation (CBNC) and Taganito HPAL Nickel Corporation (THPAL),
both in the Philippines, we continue our search to secure ore primarily through exploration of their surrounding
areas.
Concerning our recycling initiatives, engineering work is fully underway on a facility capable of processing 10,000
tons of spent lithium-ion secondary batteries per year. Also, in April 2022 our processing facility was selected as a Green
Innovation Fund Project sponsored by the New Energy and Industrial Technology Development Organization (NEDO).
At the Hishikari Mine, we are shifting to sustainability-oriented operations reflecting the mine’s 100-year life
expectancy commencing from its inauguration in 1985. In fiscal 2022 we sold 4.4 tons of gold from the mine, as
originally planned. As stewards of this prized asset of Japan, we believe we have a duty to make effective and complete use of the Hishikari Mine’s resources as our way of contributing to the local area through the long term.
In our operations in advanced materials, SMM is also developing business operations that will contribute to social

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Adapting to changes in the social environment

In our efforts to achieve carbon neutrality, during fiscal 2023 we plan to announce a roadmap for achieving net zeroby 2050. In fiscal 2022, utilizing the internal carbon pricing (ICP) system, we promoted energy conversion to LNG in
the production processes of our smelting and refining operations at the Toyo Smelter & Refinery, Niihama Nickel
Refinery, and elsewhere, while overseas we made progress in converting to biomass mixed boiler fuel at CBNC. At
the Hishikari Mine and Harima Refinery, we proceeded with conversion to purchasing of renewable energy-fueled
electric power, and at our overseas joint-venture mines we collaborated with our business partners in promoting ashift to purchases of renewable energy. In our business activities also, we are implementing the SMM Green Metal
concept toward providing products with low-carbon footprints as a way of reducing environmental impacts, andwe are taking under review acquisition of certifications from international organizations.
We are also quickening the pace of our initiatives relating to digital transformation (DX). At the Hishikari Mine, wehave begun unmanned operation of heavy machinery inside the mine, and going forward we will expand this initiative further as a way of improving safety, saving manpower, and reducing costs. In addition, to improve digital literacy Company-wide and develop future digital-savvy human resources, starting in fiscal 2023 we are now
selecting candidate DX human resources from each division and implementing procedures for training them.
In conjunction with our human resources strategy, in July 2023 we implemented reforms in our managerial track
employees system after several years of preparation. The aims of these reforms are to enhance employee motivation
through provision of diverse opportunities; nurture a corporate climate in which employees can take up new challenges, change and grow; and create a corporate culture in which all employees continue to grow. Under the newreforms to the personnel system, the former emphasis on seniority is being changed to emphasis on the value of each
employee’s duties: i.e., a system in which employees are requited in accordance with their specific duties and attendant responsibilities. Under the new system, the Company will secure, foster and utilize outstanding and diverse
human capital. In addition, we plan to introduce programs offering career building opportunities and freedom to takeup new challenges, as well as an internal system that seeks candidates who want to become project members, etc., asways of boosting the motivation of self-motivated employees and making the Company that much more vitalized.
At CBNC and THPAL in the Philippines, we are taking various steps to protect biodiversity. These include operating with minimal environmental impacts, preventing environmental accidents, and ecological restoration throughgreening of tailings dams. Again in 2022, CBNC received the Philippines’ “Presidential Mineral Industry
Environmental Award” (PMIEA), among others, and THPAL received the next-highest “Best Mining Forest Award” after
CNBC. Meanwhile, in conjunction with responsible mineral procurement and response to human rights within the
supply chain, we underwent a third-party audit concerning nickel in February 2023 and copper in July 2023 andour smelters received certifications under the Responsible Minerals Initiative (RMI), following earlier acquisitions
pertaining to gold, silver and cobalt.
Challenge 4

Strengthening the foundation of business management

As a company grounded in production, the SMM Group places highest priority on safety as the foundation of its business management. In fiscal 2022, although we experienced no fatal accidents, a number of recurring accidents occurred,along with serious accidents such as falling down and caught-in-between accidents, that caused injuries requiring morethan three months’ absence from work. Going forward, we will target inherent safety of equipment, safety managementon the production line, and elimination of both recurring and serious accidents. The Company’s safety record constitutes

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Vision for the SMM Group

Message from the President

We view corporate governance as one of the most important aspects of Company management. As we go forward, we will continue to contribute to society and fulfill our responsibilities to our stakeholders by striving to continuously improve our corporate governance and conduct our corporate activities soundly and efficiently. Also, inline with our risk management system, besides our earlier risk management which has focused on bases that destabilize our management foundation, today we are taking steps to manage risks that accompany implementation of
our growth and business strategies, and undertaking Company-wide crisis management to respond to emergency
situations such as increasingly severe natural disasters, epidemics of communicable diseases, etc. Furthermore, concerning our business portfolio, we are working to enhance our invested capital efficiency through complete application of ROCE (return on capital employed) management, introduced from our 2021 3-Year Business Plan, in all
three of our business segments: Mineral Resources, Smelting & Refining, and Materials.

3
The Special Nature of SMM’s Business Operations
Demand for non-ferrous metals (copper, nickel, etc.), our business core, is expected to mark steady growth throughthe long term. But because non-ferrous metal resources gradually deplete with the ongoing progression of mining
operations, we must continually recalibrate our portfolio of mines and other related assets. Moreover, because
metal prices are set by commodity exchanges such as the London Metal Exchange (LME), SMM’s bottom line isgreatly impacted by broad economic trends and other market environmental factors. This relationship is one of theCompany’s key characteristics.
In addition, our business environment too is becoming increasingly severe every year. Competition for the limited excellent resources available is intensifying, development of new resources inevitably is taking place in everhigher altitudes and greater depths, and costs continue to rise. Taken together, these factors make new development more and more difficult. As a result, when we participate in resource development projects and the like, wedevote much time to studying our options meticulously from diverse perspectives, because once a decision istaken, it demands immediate payment of hundreds of billions of yen. Moreover, several years must pass before
results of such investments are reaped. As such, unless we have a financial foundation able to withstand these challenges, we would be unable to sustain our business operations, and other companies would be unlikely to call on
us as a business partner for developing new resources.
Against the backdrop of these special business characteristics and our business environment, we believe maintaining a strong financial foundation and steadily implementing growth strategies targeted at achieving our LongTerm Vision are essential for attaining a favorable view within the stock markets over the long term. Accordingly, we
have adopted a performance-based shareholder return policy, aiming for a consolidated payout ratio of 35% orhigher, in principle, in our 2021 3-Year Business Plan. We are well aware of calls being made for stable shareholder
returns, so we will take this matter under consideration in formulating our next 3-Year Business Plan.
SMM’s PBR (price-to-book ratio) has remained below 1.0x in recent times, and we believe this owes greatly to theaforementioned special characteristics of our business operations. Together with demonstrating a solid growth trajectory, to win the understanding of our investors we will strive to strengthen our information messaging via IR andother activities. We will also apply the valuable feedback we receive from our investors to our management practices, as a way of enhancing our corporate value.

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4

Vision for the SMM Group

one of the KPIs linked to the remuneration of officers and many employees in managerial positions. All Group members
will strive in unity in continuing and advancing initiatives to eliminate all recurring and serious accidents.

Message to Our Stakeholders
In the past few years, the environment surrounding the corporate sector has changed significantly. Today, changes
have occurred in the values of diverse stakeholders and in what is demanded of business corporations, and I
believe companies that are unable to respond to those changes cannot survive. SMM, throughout its long history,
has sustained its business by continuously responding flexibly to the changes of the times. In that respect, the factthat we have a history exceeding 430 years may stand as proof that our business has been sustainable. Still, this longevity is no assurance that our sustainability will continue into the future. Going forward, the SMM Group mustchange its perception of what we earlier considered to be “risks” and instead think of such challenging circumstances as “opportunities” for positive change. Adapting to changes is one of SMM’s strengths, and we view the current times as a chance to put our abundant experience to maximum use. Personally, I see my mission to be building
up our sustainable Company through ongoing implementation of changes.
At the same time, we will respond responsibly and firmly to social demands. Naturally this includes advancementof initiatives in carbon neutrality and DX, but in our human resources strategy we will also proactively carry out
management accepting of diversity. Through diversified use of human capital, including foreign employees,
improvement in the ratio of female employees, hiring of young employees, etc., we will sweep away the image of
SMM as a conservative company and forge a new, more inclusive image for the future.
Sumitomo Metal Mining is a company grounded in production. As a leading force in the production industry, we
will pursue continuous growth and change, aiming to achieve our “Vision for 2030” and become “the world leader in
the non-ferrous metals industry.”

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The SMM Group’s System for Value Creation

Our History of Value Creation

Through a history of over 430 years, we have provided society with the non-ferrous metals that are indispensable
to people’s lives. In this environment, the SMM Group has been keenly aware of major changes in the businessenvironment and has generated new value. Based on our long-cultivated technologies for handling metals andour spirit of co-existence with society, we will recognize changes in increasingly diversifying and sophisticatingsocial demands as business opportunities and continue to take on new, transformative challenges.

Our path toward long-term value creation
The beginning of Sumitomo’s original business: copper smelting and refining businessOpening of the Besshi Copper Mine triggers discovery of new value, mineral resources

In 1590, the Sumitomo copper business began in
Kyoto as a copper smelting and decorative copperwork operation. By being the first in Japan to perfect a smelting technique known as Nanban-buki
for the separation of copper from silver, Sumitomo
solidified its business foundation.

Copper smelting
and refining

Smelting &Refining
Business

1600

1700

1800

1 Nanban-buki

In Japan at this time, there was no technology for removing the silver
from copper ore, so copper was sold and exported at copper prices
while it still included silver. Soga Riemon, developed a smelting andrefining technology for separating copper and silver, known as
Nanban-buki. He shared this widely with others in the same businessin Osaka, preventing the loss of wealth. Nanban-Buki from Kodo Zuroku, Courtesy of the Sumitomo Historical Archives

MineralResources
Business

Copper mines

Participated in overseas copper mines andacquired interests

The downsizing of mines in Japan meant that smelting
and refining businesses had to switch to resources procured from overseas. In 1961, SMM signed an investment
and financing contract with Bethlehem Copper Mine,
beginning the company’s involvement with overseas
mines and creating a foothold for the acquisition of mining interests that continues to this day.

1905
Relocated copper
smelting and refining
from the Niihama coastto the Shisaka Island

1971
Started production at the Toyo Smelter & Refinery
Nickel smelting
and refining

1973
Closed the Besshi Copper Mine
1917
Started the gold minebusiness

1973
Closed the Kounomai Mine

Kounomai Mine

Overseas copper
mines

1961
Investment and financing contract signed for the Bethlehem Copper Mine

Besshi Copper Mine in the
Meiji Period

Materials
Business

SocialSetting

Materials

1939
Overcoming smoke pollution at Shisaka Island

The Sumitomo Business Spirit, which continues to thisday, has its origins in the Monjuin Shiigaki, written by
the founder of the Sumitomo family, Sumitomo
Masatomo (1585–1652), in his later years to explain
Courtesy of the Sumitomo
the merchant’s frame of mind.
Historical Archives

Large-scale reforestation operations started after Iba Teigo, the second
Director-General, became manager of the Besshi Copper Mine. At
peak, more than two million trees were being planted annually and
Mt. Besshi once again overflowed with greenery.

We realized zero emissions of sulfur dioxide gas, which was a root cause of thesmoke damage, becoming the first in the world to solve the problem of smoke
damage that was afflicting copper smelters all over the globe.

The majority of Nagasaki trade

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P.66-67

Courtesy of the Sumitomo Image courtesy ofHistorical Archives
Sumitomo Forestry Co., Ltd.

1979
Closed the Sazare Mine
1985
Started operations at the Hishikari Mine1986
Acquired interest in the Morenci Copper Mine.
Full-scale investment in overseas mines

1966
Started lead frame business

1894
Large-scale reforestation operations

The Besshi Copper Mine in the past (left) and today (right)

In the Edo period, about half of all copper produced in Japan for international
trade was exported through Nagasaki. In the year 1698, Sumitomo’s annual production reached about 1,500 tons, a quantity that accounted for one quarter ofJapan’s copper production.
Export box containing copper bars from Nagasaki (model),courtesy of the Sumitomo Historical Archives

20

1960
Entered into the materials
business

Around 1650
Monjuin Shiigaki

Around 1700

Technological changes at the Toyo Smelter & Refinery

1939
Started the nickel
smelting and refining
business

1691
Opened the Besshi Copper Mine
Gold mines

Management
andSustainability

Started operation of the Hishikari Mine

With the closure of the Sazare Mine in 1979, the curtain
closed for a time on SMM’s long heritage of mining technology. However, in 1985, operations began at theHishikari Mine and SMM Group’s technology began tochart a new history in a new area. The mine boasted a richgold content ratio, even to date and has become a primary source of profit for the Group, and it also played arole in passing down our mining technology.

1900

1590
Started the copper smelting and refining business
Innovation Topic

At a time when the importance of gold as aresource was growing, we acquired the management rights for the Kounomai Mine in Hokkaido in
1917. Beginning in 1939, SMM also pioneered andcommercialized the smelting and refining of nickel
in Japan, which had hitherto relied on imports as
nickel could not be smelted domestically.

Entered into the Materials BusinessIn 1960, the electronic materials business was
being watched as a new market, and SMM
began production of germanium dioxide foruse in transistors. Since then, we have continued to provide the market with various electronic materials.

The SMM Group’s System for Value Creation

1500

The Besshi Copper Mine operated continuously for 283 years
from its opening in 1691 and made a huge contribution to
Sumitomo’s development. The opening of the mine presented an opportunity to expand the company’s business toinclude mineral resources business in addition to copper
smelting and refining. The mining technology cultivated at
the Besshi Copper Mine continues to be inherited by SMM’s
Mineral Resources Business as it expands across the globe.

Adding new metals to the Smelting &Refining and Mineral Resources
Businesses portfolio

Around 1900

The modernization of industry

Starting in the Meiji Period, with the growth in demand for communicationslines, wires for electric lighting, and copper alloy fabricated products, domestic
demand for copper increased significantly. The Besshi Copper Mine, which introduced Western-style smelting and refining, supported the industry in Japan.
Besshi Mine Upper Railway, Courtesy of the Sumitomo Historical Archives

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The SMM Group’s System for Value Creation

Our History of Value Creation

Our path toward long-term value creation

Corporate reform since the JCO criticality accident

Return to core business

Since FY2002, following the Corporate
Reform Plan, in order to improve our profitability, we have been further promoting
business selection and concentration toreform the business and cost structure of
the SMM Group to build a corporate structure strong enough to withstand international competition even in a severe businessenvironment.

Promoting the growth strategy

From FY2004 onward, we have steered our course toward
the growth strategy by promoting large-scale projects
and concentrating management resources in growthareas to expand and strengthen our core businesses. In
FY2010, we shifted our business model to three core businesses: Mineral Resources, Smelting & Refining, andMaterials. We have continued to implement our growthstrategy to enhance our corporate value andcompetitiveness.

Long-term vision to become a world leader in the non-ferrous metals industry

Began to increase the production of battery materials

We have been promoting high-performance materials for automobile batteries (cathode materials), which are expected to grow significantly in the future, and gradually increasing production capacity byleveraging our strength of an integrated process from the procurement of nickel raw material through to processing (3-business collaboration synergy).

In the 2018 3-Year Business Plan, we set the long-term vision of becoming the world leader in the
non-ferrous metals industry and worked to strengthen our growth foundation through the promotion of large-scale projects, reinforced collaboration among our three businesses, andstrengthened our corporate functions. In the subsequent 2021 3-Year Business Plan, under thetheme of “renewed challenge for change,” we will tackle 4 Challenges to realize our long-term
vision.

The SMM Group’s System for Value Creation

In September 1999, a criticality accident occurred at SMM
subsidiary, JCO Co., Ltd., which manufactured fuel for nuclear
power generation. This was a turning point in the management of the SMM Group, whereupon it reflected and in 2000
formulated the Corporate Reform Plan. We have thoroughly
fostered and instilled compliance and a culture of safety, andeven though more than 20 years have passed since the accident, we will not forget and will pass the lessons learnt on toyounger generations.

2000
Smelting & Refining Business
Copper smelting andrefining
Nickel smelting andrefining

Technological changes at the Toyo Smelter & Refinery

1993
Conversion of nickel refining process to MCLE technology
Innovation Topic

P.66-67

2005
Started production at Coral Bay Nickel Corporation

2013
Started production at Taganito HPAL Nickel Corporation

2 MCLE

Innovation Topic

Matte and mixed nickel-cobalt sulfides (MS) were dissolved in chlorine at high temperature, then electrolysis was used to produce high-purity nickel.
MCLE was more competitive than other methods in terms of cost, but it posed significant operational challenges, and only a few other producers outsideof SMM had commercialized similar technology.

3 The HPAL method

This technology enabled the recovery of nickel from nickel oxide ores that had been conventionally difficult to process. The SMM Group was the first company in the world to apply it
successfully on a commercial scale. In addition to contributing to the realization of in-house procurement and the effective use of nickel resources, we also carried out activities that
contribute to society in the Philippines, where the operations are based.

Mineral Resources BusinessGold mines

2006
Started production at the Pogo Gold Mine

Overseas copper
mines

1992
Capital participation in the Candelaria Copper Mine2017
Acquired interest in the Cote Gold Mine

2006
Started production at the Cerro Verde Copper Mine

2015
Started production at the
Sierra Gorda Copper Mine2016
Acquired additional interest in
the Morenci Copper Mine

2018
Transferred Interests in the PogoGold Mine2019
Acquired interest in the Quebrada Blanca
Copper Mine

2022
Began lower orebody mining
at Hishikari Mine

2024
Scheduled to begin production at Cote Gold
Mine P.58

2022
Transferred Interests in the Sierra
Gorda Copper Mine
As a result of a Group-wide review of its asset portfolio, after considering various strategic options,
including the sale of its interests, SMM transferred
all of its interests in the Sierra Gorda Copper Mine.

2023
Began producing bulk copper
concentrates at the Quebrada
Blanca 2 Project P.57

Materials Business
Materials

2001
Started production of cathode materials for automobile batteries

2014
Established Sumiko Energy Materials Co.,
Ltd., increased production of battery
materials and SAW filter LT/LN

2016
Decided to withdraw from the lead frame business
Management resources were reallocated to expand and strengthen battery materials and other productsthat are expected to grow in the future.

2022
Took over lithium iron phosphate (LFP) battery materials business
P.70

2025
Scheduled to complete construction of a new plant toincrease production of battery
materials (cathode materials)
by 2,000 tons/month P.70

Management and Sustainability
1999
The JCO criticality accident

SocialSetting

22

Around 1980

The spread of stainless steel

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2008
Formulated “Vision for 2020”2010
Switched to three core businesses –Mineral
Resources, Smelting & Refining and Materials

Nickel, a product of the SMM Group, was used as a raw material in stainless steel
and special steels. These materials were used in various areas such as communications, medical, construction materials, and the generation of electricity.
Demand for stainless steel picked up after 1987, and Hyuga Smelting Co., Ltd.
expanded ferronickel production.

2015
Reviewed “Vision for 2020”

Around 2000

Rapidly rising demand for cathodematerials for automobile batteries

2019
Reconsidered theLong-Term Vision

2020
Formulated “Vision
for 2030”

2022
Announced 2021 3-Year Business Plan

P.46-49

Against the background of rising environmental awareness, demand rose rapidly for cathodematerials for hybrid and electric vehicle secondary batteries. Through close collaboration withcustomers, the SMM Group worked to supply high performance, safe battery cathode materials in addition to fulfilling its obligation as a producer of nickel and cobalt, the raw materialsof battery cathode materials.

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The SMM Group’s System for Value Creation

The Global Non-Ferrous Metal Industry and the SMM Group

The Business Environment Surrounding Copper

Statistical Data Regarding Copper

Copper is thought to be the first metal used in human history. It offers high heatand electrical conductivity, is relatively inexpensive, and has superior workability.
This has resulted in it becoming an indispensable base metal for electrical wiringand copper alloy fabricated products in a wide range of industries.

Copper End-Use (2022 results)

26%

32%

World’s Largest Copper Ore Producing Countries(kt, 2020 values)

17%

13%
12%

 Building construction(water and gas piping,roofs, décor, power
distribution wires, etc.) Infrastructure(power transmission
lines, telecom lines) Industry(transformers, motors,
plant equipment, etc.) Transportation(automobiles, railroads,
ships, etc.) Other

24%
2%
4%
4%

58%
7%

Source: JOGMEC Mineral Resource Material Flows 2021

Copper Metal Production by Country (2020 results)

Global Copper Interest Production (2022 results)

Total
23,931 kt
34%

U.S.A.
1,196

China
1,855

 China U.S.A.
 Germany Japan S outh Korea
 Other

Source: The International Wrought Copper Council (IWCC) and the International
Copper Association (ICA)

Chile and Peru
are the two largest
producers
42%

4%
7%

10%

7%

7%
6%

 China Chile Japan Russia U.S.A.
 Other

59%

5%
4%
3%
3%

 CODELCO
 F reeport-McMoRan Inc.
B
 HP Group LimitedG lencore plc
 S outhern Copper Corp.
Z ijin Mining Group Co.,Ltd.
 F irst Quantum Minerals
Ltd. Rio Tinto Group K GHM Polska Miedz S.A.
 S MM Group Other

3%
1% 2%

4%

Source: S&P Global Market Intelligence

Peru
2,149

DR Congo
1,400

Total
24,913 kt

The SMM Group’s System for Value Creation

Chile and Peru are the world’s two largest copper ore producing countries, followed by China, the Democratic Republic of Congo(DR Congo) and the U.S.
Copper is an indispensable base metal in a wide range of industries, particularly for infrastructure such as electrical wiring andcopper alloy fabricated products, and China accounts for about half of global copper demand. Going forward, there is expected tobe firm increases in demand along with global economic development. However, on the supply side, with development moving
forward on the world’s superior mines, the development of new sites will unavoidably occur in increasingly remote locations or
higher elevations and with increasingly lower grade ore, making it more difficult. It is thought that this will result in the continuation of the current tight situation, including for recycled products.

Copper Metal Consumption by Country (2020 results)

Source: JOGMEC Mineral Resource Material Flows 2021

The size of the global copper market is about 22,080 kt
The SMM Group ranks 23rd in the world for global copper
interest production (FY2022: 200 kt)

Chile
5,732

Global Resource Demand Trends
Source: JOGMEC Mineral Resource
Material Flows 2021

Global Copper Supply and Demand(1960=1)
16
14(kt pure copper)

12

25,000 Ore production
 Metal production
 Metal consumption

20,00010
8
6

15,0004
10,000

2
0
(FY)

5,000

0
(Year)

24

2011

2012

SUMITOMO METAL MINING CO., LTD.

2013

2014

2015

Integrated Report 2023

2016

2017

2018

2019

2020

Source: JOGMEC Mineral Resource
Material Flows 2021

1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Global real GDP  

Crude steel  

Copper  NickelSource: Research by SMM

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

25

The SMM Group’s System for Value Creation

The Global Non-Ferrous Metal Industry and the SMM Group

The Business Environment Surrounding Nickel

Statistical Data Regarding Nickel

The main end-use of nickel is in stainless steel and a certain amount of increase indemand is expected. In addition to this, the electrification of the automotive sector
has accelerated globally in recent years and an increase in demand for nickel for use incathode materials for lithium-ion secondary batteries is expected to accompany this.

Nickel End-Use

Nickel Metal Consumption by Country/Region (2020 results)

3%
10%

12%

9%

59%

Nickel Metal Production by Country/Region (2020 Results)

Global Nickel Supply (2022 Results)

2%
Total
2,519 kt

7%
30%

11%

Russia
233

16%

20%

 China Indonesia Europe Americas Oceania
 Japan Elsewhere in Asia Africa

25%

1%
1%

26%

7%
10%

2%
2%
3%

7%
5% 7%
4% 5%

Source: JOGMEC Mineral Resource Material Flows 2021

The SMM Group’s System for Value Creation

11%

 China Europe Indonesia Japan Americas
 E lsewhere in Asia India Africa Oceania

Source: JOGMEC Mineral Resource Material Flows 2021

7%

Philippines
334

Total
2,385 kt

Source: S&P Global Market Intelligence (June 26, 2023)

3%

Leading mines
are mainly
situated in Asia

6%

69%

World’s Largest Nickel Ore Producing Countries(kt, 2020 values)

0%

6%

6%

 Stainless steel Alloys and steel/casting Plating Battery Other6%

Indonesia and the Philippines are the world’s two largest nickel ore producing countries. The end-use of about 70% of all nickel is instainless steel and, like copper, China accounts for about half of global demand. In recent years, the growth in demand for nickel
has been increasing at a much greater rate than growth in demand for copper and going forward, an increase in demand for use incathode materials for lithium-ion secondary batteries is expected to accompany the spread of EVs. However, on the supply side,although the supply of products that are not of particularly high grade—so-called “class 2” nickel grades, such as ferronickel andnickel pig iron (NPI), which are mainly used as raw materials for stainless steel production—will be brisk due to development by
Chinese companies in countries such as Indonesia, for products in the “class 1” high-grade nickel category used as raw materials in
special steels and batteries for EVs, there is a limit to the specific new development that can be carried out and a situation in which
demand exceeds supply is expected to continue.

1%2% Tsingshan Delong Jinchuan Norilsk
 Vale Glencore S handong Xinhai SMMA
 nglo American BHP ErametC hina NPI(Excluding the companies
listed above) Indonesia NPI(Excluding the companies
listed above) Other

Source: Research by SMM

Indonesia
781

New Caledonia
199
Nickel in Reserves

Australia
169

xEV Sales(1,000 Vehicles)
80,000Source: J OGMEC Mineral Resource
Material Flows 2021

Global Nickel Supply and Demand

70,000Sulfidedeposits(kt pure nickel)

Russia CanadaChina

60,0003,000

50,000 Ore production Primary nickel production Primary nickel consumption
2,000

Russia China
Laterite
deposits Philippines

40,000Indonesia

Cuba

30,00020,000

0

5

10

15

20

25

30

35

40

45

50

55

60

(million t)
1,000

0(Year)

26

 South Africa    Australia    New Caledonia    Brazil   Guatemala    Madagascar    Dominican Republic   Kazakhstan    Papua New Guinea    Other

2011

2012

SUMITOMO METAL MINING CO., LTD.

2013

2014

Integrated Report 2023

2015

2016

2017

2018

2019

2020

Source: JOGMEC Mineral Resource
Material Flows 2021

10,0000(Year) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Projection

 BEV    PHEV    HEV    MHVValues for 2023 onward are projections
Source: S&P Global Market Intelligence (July 14, 2023)

Source: B3 report 22-23/February 2023

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

27

Long-Term Vision

The SMM Group’s System for Value Creation

Become the World Leader in the
Non-Ferrous Metals Industry

Value Creation Process

Capitals

BUSINESS ACTIVITIES

Value we provide

Impacts on Society

INPUTS

BUSINESS ACTIVITIESOUTCOMESIMPACTS(FY2022 result)(FY2022 result)Financial capital as of March 31, 2023

+ Sound financial standing

Seven Competitive Strengths 7
Sound financial standing Total equity ¥1,789.3 billion
 Interest-bearing liabilities ¥457.3 billion

Financial
capitalCompetitive capabilities generated byour 3-business collaboration model



P.31

Seven Competitive Strengths 1 5of business sites and equipment
Manufactured
capitalCapital expenditure ¥140.8 billion(roughly two times that of the previous fiscal year)R esearch and development expenses ¥9.2 billion Intellectual property rights held
5,628 Technological strength related to production methods
and operating techniques that are superior in terms ofability to effectively use low-grade ores, cost competitiveness, productivity and other aspects (HPAL, MCLE, etc.) Technology and tacit knowledge that has been continually accumulated and honed over 430 years and is
focused on the next generation
 A large pool of collective knowledge supported by our
3-business collaboration

Transformation (DX)

Materials
Business

Risks and Opportunities

Intellectual
capitalSmelting &Refining Business

Markets

Renewed Challenge
for Change onsolidated employees 7,330
COfficers and employees who have inherited and internalized the Sumitomo Business Spirit and the Group’s
corporate culture Skill development through OJT A firm resolve in regard to safety and a management
framework that heightens hazard awareness

(The 4 Challenges in the 2021
3-Year Business Plan)

ment of understanding among
employees

Co-creating Value
with Society
Vision for 2030, Material Issues

P.86-87

3-Year Business Plan

P.40-41, 46-49   Vision for 2030

Co-creating value with society

Seven Competitive Strengths 3 4 6+ Social contribution

Humancapital+ Enhanced human capital
Impact C+ Skill development through off-JT+ Skill development through OJT

P.10-11+ Improved job satisfaction for
employees

P.40-98+ Promotion of health and productivity* Figures denote the relevant items

ment technology+ Raising of awareness and encourage-

P.46-49

Social and relationship capital

Seven Competitive Strengths *+ Production and equipment develop-+ High levels of safety consciousness

Sumitomo Metal Mining Group perational mines Japan 1 Overseas 7O Raw mineral resources
Copper concentrates usage 1,493kt
Nickel oxide ore usage 8,418kt
Gold and silver ore usage 202kt
Recycled materials 235kt
 Water resources (fresh water andseawater) 197,186,000m3
 Energy from coal and coke 13,778TJ (60.7% of overall
energy consumption)

 evelopment underway on the Cote Gold Project and QuebradaD
Impact A
Blanca 2 Project
P.55-58
 Increase in production of nickel-based cathode materials
Impact A
4,550 t/month  4,850 t/month Autonomous operations of Hishikari Mine’s heavy machinery atents and design rights held in Japan (as of March 31, 2023)
P
3,734 (+452 YoY) Engaging in the X-MINING© (Cross-Mining) project, an information
dissemination site, aimed at realizing open innovation Initiatives to demonstrate and commercialize the recycling techImpact B
nology of automotive lithium-ion batteries
P.77
Serious accidents 1 (2 in the previous year)
All accidents 25 (21 in the previous year) Occupational diseases 0 (0 in the previous year) Employee awareness survey
P.95
 Carried out internal education activities regarding indigenous peoImpact D
ples
P.97
 Revision of personnel system for managerial track employeesSeven Competitive Strengths 2 5

+ Development expertise

P.60-65

Human capital

Seven Competitive Strengths 1 3 7

P.68-73Natural capital

response to growth in demand+ Results achieved through Digital

P.54-59

Seven Competitive Strengths 1+ Increase of production capacity in

Equity ratio 59.8% (result)
JCR credit rating AA Dividend payout ratio 35.1%
Dividend ¥205/share (-¥96/share YoY) TSR (10-year cumulative) 130.1%
P.52


management

Products and services

relationships with local communities
and indigenous peoples

OUTPUTS(FY2022 result)Non-ferrous metal materials
NiSmelting & Refining• Annual production volume 80kt
Cu

Mineral Resources

Mineral Resources

Cathode materials for batteries
Mineral Resources Smelting & Refining Materials•M onthly production capacity 4,850t

Smelting & Refining•A nnual production volume* 18t* Annual production volume after smelting

relationships with business partners,
contractors, and supply chain
partners+ Expansion of product applications
through co-creation with customers+ Proper fulfillment of tax obligations

Smelting & Refining•A nnual production interest 200kt•A nnual production volume of electrolytic
copper 450kt
Au

Highly advanced materials

Social andrelationshipcapital+ Building and maintaining of good

Impact C•Recover scandium and chromite from nickel
oxide ore
Smelting & Refining

Materials•Develop a recycling process for lithium-ion
secondary batteries(copper, nickel, cobalt, lithium)

the atmosphere and water
Naturalcapital- Energy consumption+ Recycling production of copper, zinc,precious metals, etc.

+ Response to climate change

Vision 3
Significant Environmental
Accidents
Vision 4
Biodiversity
Impact B

Preserve the natural environment through reduction of
GHG emissions, and increased
production and new development of products contributing
to a low-carbon society
From
Vision 5
Employees’ Occupational
Health and Safety
Vision 6
Diverse Human Resources
Vision 7
Development and Participationof Human Resources

Significant environmental accidents 0
Infrastructure investment and spending on support services¥1.87 billion
P.96
 Grievance mechanism. Joined JaCER
P.97
 Carried out internal education activities regarding indigenous peoImpact C
ples
P.97
 CBNC and THPAL were awarded four awards by the Philippine
Department of Environment and Natural Resources
P.65
 Practiced responsible mineral sourcing and sustainable procureImpact E
ment
P.98
 CWO® use expanded to clothing Income tax paid
¥69.4billionn
P.37

From
Vision 8
Engagement with Stakeholders apital expenditure related to environmental preservation
C¥12,171 million
P.39
 Reduction in water use through optimization 1,365,000m3
 Increase in emissions of hazardous substances into the atmosphere
and water 124t Increase in consumption of energy from coal and coke 730TJ
 Percentage of recycled materials used 2.21%
 Reduction in GHG emissions intensity (compared to FY2013) 1%
Smelting & Refining

From
Vision 2
Climate Change

Impact C enewal of all work spaces in the Head OfficeR
Impact C
New employee dormitory in Besshi (259 rooms)
 Annual hours of education per employee 23 (30 hours in the previImpact C
ous FY)P.94
 Smelting & Refining University
Impact C
P.132
 Mining School
P.133
 Recognized as 2023 Certified Health & Productivity Management
Impact C
Outstanding Organization
P.133


Effective use of resources- Hazardous substances emitted into

Impact A

Stably supply high-quality
non-ferrous metals andmaterials+ Building and maintaining of good

From
Vision 1
Effective Use of Non-Ferrous
Metal Resources

The SMM Group’s System for Value Creation

MineralResources
BusinessIntellectual capital

P.34-35

of 35% or higher+ Increase, expansion, and upgrading

Mineral Resources Operational mines 7
Smelting & Refining Plants Japan 5 Overseas 3
Materials Plants Japan 16 Overseas 4
R&D Research centers Japan 4

R egarding society
An organizational sense of ethics
Risk management structures
Social license to operate Regarding business partners
Relationships of trust that have been cultivated overmany years
Appropriate supply chain management Regarding governments
Relationships of trust with governments in each country and region Regarding customers and employees
The SMM Group brandA close affinity with our customers’ needs and the collaborative capabilities to continuously respond to them Regarding local communities
Involvement with local communities that has been
built up through our core business+ Consolidated dividend payout ratio+ TSR

Manufactured capital(equity ratio of 50% or higher)

Impact C

Create comfortable andsafe workplaces where all
employees can take avibrant and active part

Vision 9
Co-Existence and Mutual
Prosperity with Local
Communities
Vision 10
Rights of Indigenous Peoples
Impact D

Achieve co-existence andmutual prosperity withlocal communities
From
Vision 11
Human Rights in the Supply
Chain
Impact E

Achieve sustainableprocurement in the entire
supply chain

The + and - signs express the nature of the impact of each type of capital

P.32-33

28

SUMITOMO METAL MINING CO., LTD.

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SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

29

The SMM Group’s System for Value Creation

Value Creation Process (Business Model) Explanation

Business Model
MineralResources

Business Model—Organic 3-Business Collaboration
Materials

Smelting &Refining

Suppliers
Business Partners

MiningInterest Holders

Investment(Copper and Gold)
Ore(Copper and Gold)

Mineral Resources BusinessOperation of Hishikari MineSales of copper concentrates



Investment(Nickel)Mining andTrading Companies

Ore(Copper and Gold),
Copper Scrap

Smelters andRefiners andTrading Companies

Exploration of new minesAcquisition and transfer of mining interests

Training of mining engineers

Ore(Copper andGold)

Sharing of information onore characteristics(grade, properties, impurities)
Mutual use of technology
Interaction of human resources
Sharing of information on
demand for metals

Steel Dust(zinc)
Investment

Ore

Research & Development

Ore(Copper, Nickel,
Cobalt) articipation in planning overseas mine develP
opment and operation

Smelting & Refining Business

Smelting & Refining Business opper, gold (and other precious metals) smeltC
ing and refiningNickel (Cobalt) smelting and refining

Zinc RecyclingBattery RecyclingTraining of smelting and refining engineers

Metallic materials

Metal Fabricators andTrading Companies

Used
secondarybatteries

Metallic
materials

Mutual use of technology
Interaction of human resources
Sharing of information on
demand for metals

Batterycathode materials

Materials Business
Material
Manufacturers andTrading Companies

Battery Manufacturers

Manufacturing and sales of battery cathodematerialsRaw materialsManufacturing and sales of advanced materials

Training of materials engineers

Advancedmaterials

P.54-59

P.60-65

We procure copper and gold ores from the market and our Mineral
Resources Business, and nickel and cobalt ores from our investment
mines for smelting and processing. As for products, metallic materials
are sold to metal fabricators and trading companies, and used forbattery cathode materials are supplied to our Materials Business.
Materials Business

Sharing of information on
the properties of metallic materials(grade, properties, impurities)

Pre-processing
Manufacturers ofWaste Batteries

Mineral Resources BusinessWe invest in copper and gold mines, develop mines with our partners, supply ore to our Smelting & Refining Business, and sell some ofthe ore to outside parties. We also own and operate the Hishikari
Mine, where we mine gold ore and supply it to our Smelting &Refining Business.

P.68-73

In our battery materials business, we procure metallic materials fromour Smelting & Refining Business and other raw materials from outside sources, process them into battery cathode materials, and sellthem to battery manufacturers. In the advanced materials business,
we have various product groups such as crystal materials, powdermaterials, and package materials, and we procure raw materials internally and externally for processing and selling to customers such as
electronic device manufacturers.

Electronic Device
Manufacturers

Competitive capabilities generated by our 3-businesscollaboration model(1) Great reduction of procurement risk due to the sharing ofresource development regulations, supply and demand trends,
and other information(2) Promotion of efficient development of new products, etc. throughthe sharing of technological information concerning non-ferrous
metals and collaborating with customers in the Materials Business(3) A stable supply of highly advanced materials including cathodematerials for automobile batteries by collaboration between the
Smelting & Refining and Materials businesses(4) Optimization of characteristics in the materials we supply throughcollaboration between the Smelting & Refining and Materials
businesses(5) Advancement of knowledge and expansion of mining business
opportunities through collaboration between the Mineral
Resources and Smelting & Refining businesses(6) Cutting-edge innovation through the collective wisdom possessed by human resources with diverse backgrounds(7) Building of cyclical systems and expansion of opportunities realized through collaboration between the Mineral Resources,
Smelting & Refining, and Materials businesses(8) Assurance of traceability in terms of quality and the like through aintegrated internal supply chain
Recycling

The SMM Group’s System for Value Creation

Technical andhuman support

Steel ManufacturingandTrading Companies

Customers
Markets

SMM Group

Our Mineral Resources Business develops and operates mines
in a way that is considerate to the environment and society.
Our Smelting & Refining Business then generates high-quality
metal materials from the extracted ores. And, our Materials
Business adds value to these materials that meet the needs ofthe times. In this way, SMM has a globally unique 3-businesscollaboration business model in which we operate threebusinesses — Mineral Resources, Smelting & Refining, andMaterials — which collaborate in an organic way. We arebuilding up competitive capabilities by sharing and utilizing
human resources, goods, technology, and information
between each business.

P.77

The SMM Group is engaged in various recycling efforts. In the
Smelting & Refining Business, we collect steel dust from steel manufacturers and trading companies to produce and sell zinc oxide pellets, which is the raw material for metallic zinc. We also purchasecopper scrap from electric wires and other sources, smelt, refine, andrecycle it.
In recent years, as the shift to electric vehicles has rapidly progressed, we have been promoting battery recycling by recovering
nickel and cobalt from used secondary batteries for automobiles in
our Smelting & Refining Business, processing them into metallic
materials, and supplying them to our Materials Business to be reusedas cathode materials for batteries in our Materials Business. In addition, we have invented a technology to recover lithium from usedsecondary batteries. We will continue to promote a variety of recycling efforts.

Outcomes and Impacts—Forming a Sustainable Society
Key INPUTS—Seven Competitive Strengths
The SMM Group’s seven competitive strengths come from its
various management capital. Throughout our 430-plus yearsof history, we have continuously honed our competitivenessand achieved sustainable growth by combining diverse

30

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

capital to execute strategies and businesses that meet thedemands of the times.
P.32-33

The SMM Group has established its “Vision for 2030” to serve
as a milestone for realizing its long-term vision to become“the world leader in the non-ferrous metals industry” and has
identified 11 material issues as initiatives that must be accomplished. In addition, a major tenet of the SMM Group’s corporate philosophy is “sustainable co-existence with the global
environment,” which is our social mission as a manufacturing

company that relies on resources. By steadily addressing eachof the 11 material issues, we will earn our social license tooperate, which is indispensable for our business. We will also
contribute to a sustainable society together with our customers, NGOs, NPOs, employees, local communities, business
partners, and other stakeholders.

SUMITOMO METAL MINING CO., LTD.

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31

The SMM Group’s System for Value Creation

The SMM Group’s Capital:
Seven Competitive Strengths Cultivated by the Sumitomo Business Spirit

1
The Sumitomo Business Spirit
Trustworthiness and pride inherited fromthe original businessIntellectual Capital, Manufactured Capital, Natural Capital riginated in the Nanban-buki method for separatingO
crude copper from silver, developed in Kyoto by Soga
Riemon around 1600
 Have exploration, mining, and mineral processing technology
for taking on the challenges presented by difficult-to-develop
new deposits and sea-floor resource development Have advanced smelting and refining technology such as
High Pressure Acid Leach (HPAL), the world’s first method
for converting low-grade oxide ore into a nickel resource Have combined high-level knowledge of metals cultivatedthrough our history and state-of-the-art technological capabilities in the materials field and a 3-business collaboration
model based on an integrated supply chain from resource
development to production and recycling of highly
advanced materials contributing a decarbonized society Have collaborations with academic institutions to realize
technological innovation focused on the society of 2050

4

 ave a long history of co-existence and mutual prosperityHwith local communities through our business activities,
based on the Sumitomo Business Spirit, in which we work
to make people happy, including the families of employees, and develop together with society Develop mines starting with town building. For example,
an elementary school in Niihama City, Ehime Prefecture,
was founded by Sumitomo 128 years ago, when Besshi
Copper Mine was in operation.
 Contribute to local communities not only in Japan, butalso overseas through scholarship programs, the operationof hospitals and schools, road construction, and otherinitiatives
 Build trust with local communities based on dialogue andcollaboration


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SUMITOMO METAL MINING CO., LTD.

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Employees who share our business spirit and an
open and vibrant organizational climate
 ave Sumitomo DNA, which has been passed down fromH
generation to generation for more than 430 years All employees understand and practice the Sumitomo
Business Spirit, SMM Group Corporate Philosophy, andManagement Vision because they are instilled throughcontinual education Actively invest in human resources (various training programs, provision of learning opportunities, promotion ofhealth and productivity management, etc.) Our corporate culture values people and respects diversity(assigning jobs and providing support matched to
employees’ life stages, and strengthening of mid-career
recruitment) Promote initiatives to stimulate communication acrossorganizations and positions


5

Social and Relationship Capital

Involvement with local communities that has been
built up through our core business

Human Capital

Technology that has been continually honed over
430 years and is focused on the next generation


Relationships of trust with business partners thathave been formed with a long-term perspective
 uild and maintain good relationships with reliable, worldBclass partners as a foundation for superior mine interests
overseas Have strong partnerships with our business partners basedon the trust that comes from Sumitomo’s approach tobusiness operations, rooted in the Sumitomo BusinessSpirit, and our high-level knowledge and technologies
related to metals cultivated over our long history Create further business opportunities through our longterm partnerships and relationships of trust

7Social and Relationship CapitalManagement of serious risks fulfilling
responsibilities according to each level of the jobclassification, with a firm resolve in regard to safety ave a target of zero occupational accidents based on theH
recognition that unless the correct management framework is established, there is the risk of serious accidents
that cost lives, and collaboration of labor and management to promote safety initiatives
 Promote equipment-related measures including thoserelated to essential safety at facilities, with a focus on risksof serious accidents involving operating facilities, highplaces, heavy loads, and heavy machinery Improve on-site management capability by strengthening
checks on realities and actions through work observationand practical risk assessment (RA) as well as through priority-oriented initiatives, etc.
 Improve hazard awareness by introducing and practicing
more effective education and training (including hands-on
training based on VR)

Social and Relationship Capital, Natural Capital

6

Human Capital, Manufactured Capital3

Financial Capital, Natural Capital

A close affinity with our customers’ needs andthe collaborative capabilities to continuously
respond to them ave strength provided by a comprehensive knowledge ofH
not only materials but also the characteristics of the metals
that are their raw materials, which we leverage to connect
the various technologies we have developed to date with
the innovation sought by the customer Have a “top-class share of the global market” of nickelbased cathode materials for lithium-ion secondary batteries used by major electric vehicle manufacturers, realized
through our technology for extracting nickel from lowgrade oxide ore and a framework that enables us to securematerials stably Recognize the importance of taking a long-term approachto handling customer demands steadily and sincerely, in a
way that wins trust, with ongoing new product creation in
the automotive, energy and environment, communications, and other fields


The SMM Group’s System for Value Creation

The SMM Group has cultivated a variety of management
capitals over its 430 years of history, which started withthe copper smelting and refining business that was theoriginal business it inherited from the Sumitomo Group,
and it has combined these in its strategies and businesses to create “Seven Competitive Strengths.”
These strengths form the base of the Group’s growth
and they are built upon the Sumitomo Business Spirit.
The application of this business spirit has enabled theGroup to overcome every difficulty so far. Now we areresponding flexibly to changes in the times through collaboration among our three businesses of Mineral
Resources, Smelting and Refining, and Materials in a waythat leverages the strengths of each business and by realizing “transformation”, “legacy”, and “education” throughthe 4 Challenges of the 2021 3-Year Business Plan.

2

Financial position that enables us to takeadvantage of investment opportunities
 aintain a sound financial position to withstand large oneM
time cash outflows for resource and smelting & refining
development projects, which require a long period of timefrom investment to recovery, and to avoid missing investment opportunities Possess several superior mine interests that support asound financial position, including Japan’s only large-scalecommercial gold mine, the Hishikari Mine, and theMorenci Copper Mine, one of the world’s top-class producers of copper Decisively review the portfolio to maintain profitability


SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

33

The SMM Group’s System for Value Creation

Risks and Opportunities

Risk Factors (External/Internal)

1

2

4

5

Strategies

Risk Countermeasures•N ationalization of mines; increased taxation• P rohibition of export of mineral ores and intermediates• S tricter approval for development and operation•N egative impacts on production, including supply and demand and supply chains
Opportunities • I ntroduction of preferential taxation in the automobile market• Full consideration of country risk and making investment decisions while expanding the business globally• Cooperation with overseas local partners to monitor the status of the market
entry and taking appropriate measures as needed to respond to changes after
entering a new market• Conclusion of contracts that make allowances for resource nationalism• Information gathering through embassies, governments, and JV partners• Approach to local communities and indigenous people• Diversification of materials suppliers and product customers• Establishment of BCP and crisis management framework• Consideration of establishment of next plant to increase production ofbattery materials

Economic Environment• Metal price and forex movement• Soaring energy prices•A dverse impacts on business performance due to lower metal prices andexchange rate fluctuations• S witch to alternative materials due to a sharp rise in metal prices•D ecrease in competitiveness due to higher operating costs
 xpanding demand for non-ferrous metals, especially copper and nickel,
Opportunities • E
which are indispensable for the electrification of automobiles, etc.

• Aiming to reduce costs in the Mineral Resources and Smelting & Refining businesses and stabilizing earnings in the Materials business, which is relatively insensitive to non-ferrous metal price fluctuations• Steadily pursuing the growth strategy based on collaboration among our threebusinesses• Prior analysis of management impacts caused by fluctuations in metal
prices and exchange rates• Entrance into alternative materials and technologies businesses (e.g.,
LFP), expansion of the advanced materials business• Promotion of energy conservation (switch to high-efficiency equipment
and improvement of manufacturing processes)• Promotion of large-scale projects

Social Environment• Increased social responsibility for climate change• Acceleration of the carbon neutrality movement• Emergence of issues related to Business and Human
Rights• E xclusion from investment due to lagging approach to ESG•D ecline in competitiveness due to lagging approach to GHG emissions
reduction•D elays in or withdrawal from projects due to opposition from local communities or due to infringement of the rights of local communities andindigenous peoples
 rowing demand for low-carbon products that contribute to GHG reducOpportunities • Gtion, such as battery materials• Participating in the GX League and introducing clean energy and energy-saving
equipment at production sites to achieve net zero GHG emissions by 2050
• Proceeding with reducing GHG emissions, and promoting initiatives for researchand development of products that contribute to the realization of a carbon-neutral society, etc.
• Support the United Nations Guiding Principles on Business and Human Rights,
and conduct due diligence and operate a complaint resolution (remedy) mechanism based on the Sumitomo Metal Mining Group Policy on Human Rights• GHG emissions reduction activities• Dialogues and co-existence with local communities and enhancement ofunderstanding of indigenous cultures• Due diligence for mineral procurement• Expansion of business for low-carbon products(e.g., battery materials and the near-infrared absorbing material CWO®)Work Environments• Shrinking and increasingly mobile Japanese labor market• Securing human resources and diversifying work styles•O utflow of excellent human resources•A dverse effects on operations due to shortages of labor (project delays,
loss of opportunities for new entry, increased difficulty of technology
transmission and continuation of production activities, and occurrenceof occupational accidents)
 ttract diverse human resources and create innovation
Opportunities • A• Providing employees with safe and healthy work opportunities by reforming work
styles and rebuilding an open and vibrant organization climate• Promote human resource development, encourage and evaluate efforts toaddress long-term issues, build a corporate culture that enables continuous “taking on of challenges,” “change,” and “growth,” and secure, foster, and utilize adiverse human capital• Strengthening of engagement by raising the brand profile within the Group• R ationalization and reduction of labor through the introduction of DX,
etc. to reduce working hours• R evision of the personnel system for managerial-track employees• Raising awareness and actively recruiting by strengthening corporate branding

Technology• Evolution of technology in the field of information andcommunication• Catching up with the technology by overseas competitors• Increasing and growing cybersecurity risks• Growing importance of intellectual property due toglobalization•D ecline in competitiveness due to lagging response to DX•D ecline of HPAL technology dominance• E xternal leakage, destruction, falsification, etc. of information due todelays in establishing an information security system• Delay in protecting intellectual property, infringement on other companies (patent infringement, filing of lawsuits related to intellectual property)
Opportunities • Improving productivity by introducing DX and utilizing new technologies• Developing DX infrastructure to address human resources in an era of declining birthrate, improve management efficiency, and create business reforms and new businesses• Continuing to develop technologies to maintain and improve the HPAL recovery rate
• In addition to information security education for employees, migrating to a cloudservice with advanced security features that enable safe use of internal and external systems regardless of the usage environment• Establishing a department dedicated to intellectual property management toensure acquisition and preservation of intellectual property• Launching a DX Department and developing human resources proficientwith digital technologies• Improving operations through data analysis• Deepening/continuous improvement and stable operation of production
technology (HPAL)• Strengthening of information security• Enforcement of and support for intellectual property management• Application of DX to model factories and business sites

Development of Resources, Smelting & Refining
Operations, Development of Highly Advanced Materials• I ncreased difficulty in acquiring interests due to intensified competition• I ncrease in the cost of investing in and operating mines xpanding demand for non-ferrous metals, especially copper and nickel,
Opportunities • E
which are indispensable for the electrification of automobiles, etc.

• Emphasizing acquiring social license centered on co-existence with local
communities• In addition to our own exploration activities, working with business partners
overseas to acquire new projects• Careful selection of investments based on a decision of profitability from our many
years of experience in exploration and mine evaluation know-how, and striving to
reduce and avoid the risk of uncertainty from the preparatory stage of development• Operational improvements (dispatch of engineers for stable operationand streamlining, improvement of existing operating equipment,enhancement of process capacities)• Securing of a sound financial base
• Participation in development of and investment in superior overseas
mines, etc.

•D eterioration of raw material purchase conditions, plant shutdown•D ifficulty in procurement of raw materials and equipment and skyrocketing prices
 rowth in demand for recycling associated with the increased demand
Opportunities • G
for metals, increased collection of used products, etc.

• Securing stable raw material sources (own mines) and conflict-free raw materials by
investing in and participating in the management of superior overseas mines, etc.
• The materials procurement department will consider multiple purchases andalternative materials while improving unit requirements, and will take appropriate
measures as needed in response to changes when responding to difficulties in the
supply of materials and equipment and price hikes• Proactively working on battery to battery horizontal recycling of used lithium-ion
secondary batteries, contributing to the formation of a sustainable recycling-oriented society and strengthening the promotion of resource recycling to copewith global resource depletion• Ongoing study of measures to secure mineral reserves for CBNC andTHPAL• Strengthening the search for new nickel projects in the next period• Promoting the commercialization of battery recycling

Development of Resources• Decrease in superior mines and increased uncertainty inmining investment
Smelting & Refining Operations• Instability in procurement of non-ferrous metal raw materials and equipment

Risks

Risks

Risks

Risks

Risks

Risks

Risks

6

Development of Highly Advanced Materials• Rapid changes in market demands and prolongation of
new product development• Potential huge financial burden for defects in in-vehicle
products

7

34

Other
• Increase in frequency and intensity of natural disasters• Spread of infectious disease

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

• Obsolescence of products and technologies due to technological innovationand market change• P roduct liability and claims litigation(recalls and damages incurred for end products containing defective
in-vehicle products)
 ising demand for cathode materials due to increasing demand for elecOpportunities • R
tric automobiles•G rowing demand for advanced materials used in electronic devices forthe realization of a digital society
Risks

Risks

•D
 amage to equipment/facilities and occurrence of spill accidents due tointensification of floods, storms, etc.
• I nterruption of global supply chains•N egative impacts of infectious diseases on production, including supply
and demand and supply chains• Deepening relationships with customers, accurately understanding customer andmarket needs, and putting in place sufficient sales and development structures topromote new product development based on this understanding and to mitigate
the impact of such development• Ensuring the effective functioning of the Group’s quality management system(QMS) to further improve quality and enhance traceability• Accelerating development through the use of government support programs,
joint development with external parties, and industry-academia collaboration—

The SMM Group’s System for Value Creation

3

Risks (Threats) and Opportunities

Governments and Policy• Changes in laws and regulations(rise in mineral resource nationalism, increase in environmental awareness, etc.)• Conflicts and friction between countries• Speeding up development of LFP battery materials• Compliance with the quality management system and initiatives to further improve quality and strengthen management• Expansion of production by 2,000 tons/month, including construction ofa new plant in Niihama (project eligible for a subsidy from the Ministry of
Economy, Trade and Industry)• Promoting commercialization of silicon carbide (SiC) substrates• Response to large-scale disasters• Establishment of BCP and crisis management framework• Stable supply through an integrated supply chain

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

35

The SMM Group’s System for Value Creation

Financial and Non-Financial Highlights

Net Sales

Profit Before Tax/Equity Method Profit/
Profit Margin Before Tax(¥ billions)
1,500

1,423.0(¥ billions)
400

1,000

912.2

851.9

28.4

300

926.1

500

100

2018

2019

2020

30

229.9
200

0
(FY)

(%)
40

357.4

1,259.1

2021

2022

0
(FY)

89.4

9.8

9.3
79.0

-4.9
2018

123.4

6.2

8.7

2019

2020

(¥ billions)
450

16.2
57.5
2021

10

457.3
349.8

367.9

330.7

300

20

13.3

ROA/ROE

Interest-Bearing Liabilities/Debt-to-Equity Ratio2

0.33(times)
0.6

0.4

0.37

150

0.28
0.21

0.2

2022

0
(FY)

2018

2019

2020

2021

15

8.94

10

6.43

5.91

3.78

3.45
2019

5

36.5
0

21.96

20

301.4

0.30

(%)
25

2022

0

0
(FY)

2018

6.45

5.25
2020

2021

2022

ROE

 Profit Before Tax (left axis)    Equity Method Profit (left axis)
Profit Margin Before Tax (right axis)

 Interest-Bearing Liabilities (left axis)
Debt-to-Equity Ratio (right axis)

Consolidated net sales increased by ¥163.9 billion year on year to¥1,423.0 billion due mainly to the extremely weakened yen, rising nickel
prices, and strong sales of automobile battery components.

Consolidated profit before tax decreased by ¥127.5 billion year on yearto ¥229.9 billion, due mainly to the lack of a gain from the transfer of theentirety of the Company’s interest in the Sierra Gorda Copper Mine andshare of profit of investments accounted for using equity method
related to the mine, which were recorded in the previous fiscal year.

The amount of interest-bearing liabilities as of March 31, 2023, increasedby ¥155.9 billion year on year to ¥457.3 billion. The debt-to-equity ratio
increased by 0.07 points year on year to 0.28 times.

ROA decreased by 7.08 points year on year to 6.45%. ROE decreased by
11.52 points year on year to 10.44%.

Profit Attributable to Owners of Parent

Dividend per Share/Payout Ratio

Net Cash Provided by Operating Activities

Capital Expenditure/Depreciation(¥ billions)200(¥ billions)150(¥ billions)
300

300

200

100

0
(FY)

(¥)
400

281.0

160.6

35.4
30.0

60.6

2018

2019

2020

35.11

35.1

30

205

200

(%)
40

150

136.5

20

100

120.4

114.7
91.5

100

121

2021

2022

100

73

78

0
(FY)

2018

2019

2020

2021

140.8

159.5

301

94.6

66.8

35.1

The SMM Group’s System for Value Creation

ROA  

10.44
13.53

2022

10

50

0

0
(FY)

47.4 43.5 50.7 45.4

50

2018

2019

2020

2021

0
(FY)

2022

 Dividend per Share (left axis)
Payout Ratio (right axis)

2018

2019

35.1

45.7

2020

64.5
46.5

2021

53.3

2022

 Capital Expenditure    Depreciation

Profit attributable to owners of parent decreased by ¥120.4 billion year
on year to ¥160.6 billion, due mainly to a decrease in consolidated profit
before tax.

Our dividend policy is performance-based. For FY2022, the annual dividend per share was ¥205, comprising an interim dividend of ¥90 and a
year-end dividend of ¥115. The payout ratio reached 35.1%, fulfilling thedividend policy of a consolidated payout ratio to be 35% or more inprinciple in our 2021 3-Year Business Plan.

Net cash provided by operating activities decreased by ¥39.1 billion year
on year, due mainly to a decrease in profit before tax and an increase ininventories due to the impact of an increase in non-ferrous metals
prices, despite a decrease in trade and other receivables.

Total Assets

Equity Attributable to Owners of Parent/Ratio of Equity
Attributable to Owners of Parent to Total Assets

Income Tax by Country or Region (FY2022)(¥ billions)
3,000(¥ billions)
2,000

We are making the necessary capital investments to maintain, enhance,
and improve productivity. Capital investment in the period ending March
31, 2023 increased by ¥76.3 billion year on year to ¥140.8 billion due tothe progress of large-scale capital investments such as the Cote Gold
Project and increased production of cathode materials for automobile
batteries.

(millions of yen)

2,707.9
2,268.8

2,000

1,797.7

1,719.7

1,500

1,886.0

1,000
1,000

0
(FY)

(%)
80

58.3
1,047.6

58.3
1,001.9

59.1
1,113.9

63.7

1,631.7
60.3

1,445.3

500

2018

2019

2020

2021

2022

0
(FY)

2018

2019

2020

2021

2022

Japan

U.S.A.

Netherlands

Peru

Chile

China

40,374

5,431

453

12,303

4,975

1,212

40

Philippines

New Caledonia

Australia

Others

Total

20

3,717

707

266

6

69,44460

0* With regard to equity-method affiliates, the above amounts include the Company’s proportional burden of income tax.

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

Total assets as of March 31, 2023 increased by ¥439.1 billion year on yearto ¥2,707.9 billion, due mainly to increases in inventories, property, plantand equipment, investments accounted for using equity method, andother financial assets under non-current assets.

36

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Total equity attributable to owners of parent increased by ¥186.4 billion
year on year to ¥1,631.7 billion. The ratio of equity attributable to owners of parent to total assets (equity ratio) was 60.3%. We were able toachieve a level higher than 50%, our target for maintaining a soundfinancial position.

1. 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 the allowance forbad 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 accordancewith 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.
2. Amounts of interest-bearing liabilities and the figures for the debt-to-equity ratio do not include lease liabilities.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

37

The SMM Group’s System for Value Creation

Financial and Non-Financial Highlights

Number of Employees & Officers by Region, Consolidated (As of March 31, 2023) Numbers in parentheses indicate the change from the end of March 2022.

Capital Expenditure Related to Environmental Preservation(millions of yen)CanadaSouth Korea

19 (+6)

5 (+1)

Netherlands

FY

2018

2019

2020

2021

2022

2023 (plan)

Pollution prevention/environmental preservation

5,508

5,244

5,715

7,549

11,694

18,446

100

141

339

157

477

401

Total

5,608

5,385

6,054

7,706

12,171

18,847

Ratio of capital expenditure

11.8%

10.6%

17.3%

11.9%

8.6%

9.5%

Energy conservation

1 (±0)
Japan

China

U.S.A.

6,085 (-139)

105 (-3)

12 (-2)The SMM Group’s System for Value Creation

Brazil1 (±0)

Taiwan26 (-1)
VietnamPhilippines

145 (+145)

1,504 (+71)

Distribution of Economic Value to Stakeholders(¥ billions)
1,500

Peru

17 (+1)

Australia

900
600

23 (-3)300

Number of Employees & Officers Worldwide (Consolidated) Figures are for March 31 of each fiscal year

Breakdown of employees andofficers, by gender

2018

2019

2020

2021

2022

Managers

1,107

1,076

1,082

1,061

1,034

Regular employees

5,579

5,711

5,895

6,033

6,208

Non-regular/limited-term employees

612

678

710

676

603

Officers

110

105

110

109

105

Total

7,408

7,570

7,797

7,879

7,950

Male

6,079

6,178

6,328

6,415

6,477

1,329

1,392

1,469

1,464

1,473

7

7

7

7

7

Female

1

1

1

1

1

Total

8

8

8

8

8

Outside directors

3

3

3

3

3

FemaleBreakdown of directors

SUMITOMO METAL MINING CO., LTD.

904.6

866.5

Integrated Report 2023

6,000

860.6

7,879
7,950
7,797
7,570
7,408
1,865
1,655
1,647
1,665
1,564
5,844

5,905

6,150

6,224

6,085

2,000

2018

2019

2020

2021

2022

0
(FY)

2018

2019

2020

2021

2022

 Suppliers    Employees    Shareholders/Creditors   Government    Society

 Japan    Overseas

Occupational Accident Frequency Rate

Greenhouse Gas Emissions (Scope 1 and 2)

2.0
1.5

(kt-CO2e)
3,000

1.71
1.48

1.61
1.05

1.63

1.0

0
(Year)

2,823
2,807
2,809
2,760
2,647
1,484
1,353
1,412
1,387
1,300

2,000

1.13

1,456

0.5

Male

38

1,179.1

8,000

4,000

Chile

0
(FY)

Breakdown of employees andofficers, by class

1,384.4

1,200

7 (-1)

FY

Number of Employees & Officers Worldwide (Consolidated)
Figures are for March 31 of each fiscal year

2018

Japan  

0.35

0

2019

2020

1,000

0.35

0.31

2021

2022

Overseas

At business sites in Japan, despite advancing facility safety through risk
assessment and enhanced line management through work observation,
the number of accidents increased slightly to 24, due mainly to falls.
Business sites overseas took effective disaster countermeasures, such as
hazard prediction education and safety patrols, and in 2022, too, the situation remains favorable compared to business sites in Japan.

0
(FY)

2018

1,395

2019

1,373

2020

1,347

2021

1,339

2022

 Japan    Overseas

In FY2022, the SMM Group’s GHG emissions (Scope 1 and 2) were 2,823
kt-CO2e due to an increase in production. Direct GHG emissions reductions from energy conservation and other activities in FY2022 wereapproximately 6 kt-CO2e.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

39

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

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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

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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.

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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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Integrated Report 2023

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

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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

92

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.

Integrated Report 2023

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.

Integrated Report 2023

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

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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

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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

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

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.
SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

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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Continuing to Support Value Creation

Corporate Governance

Basic Approach

Corporate Governance Framework

SMM views corporate governance as a disciplinary frameworkboth for maximizing the corporate value of the SMM Groupand for ensuring sound management practices. As such, it is
one of the most important management issues.
SMM has established the SMM Group Corporate
Philosophy based on the Sumitomo Business Spirit. Throughstriving to enhance our corporate governance, we will conduct efficient and sound business activities, make positive
contributions to society, and fulfill our responsibilities to ourshareholders and all other stakeholders in order to realize the
SMM Group Corporate Philosophy.

Formulating Corporate Governance Guidelines
SMM has established Corporate Governance Guidelines
which cover our basic philosophy on corporate governanceand our corporate governance framework, including our relationship with stakeholders. More details are available on the
Company’s website.

In line with its Corporate Governance Guidelines, which summarize the Company’s basic philosophy for corporate governance and the framework therefore, the Company believes
that its governance is a system that ensures that businessexecution and the associated monitoring and supervision areeach functioning fully by using audit and supervisory board
and executive officer systems with which to conduct

governance through a three-part organizational structure inwhich decision-making and supervision are addressed by the
Board of Directors, business execution by the president andthe executive officers, and auditing by the Audit &Supervisory Board members and the independent public
accountant.

WEB https://www.smm.co.jp/en/ir/management/

governance_policy/

General Meeting of Shareholders
Decision-Making and Supervision

Initiatives to Strengthen Governance
SMM positions corporate governance as one of the mostimportant issues in our management, and is taking steps tostrengthen governance. We continue to constantly review,
improve, and deepen the current state of our corporate

Auditing

Audit &
Supervisory Board

Board of Directors
Governance Committee

governance in light of legal revisions and social circumstances in order to achieve even better corporate
governance.

ReportingBusiness Execution

Reports to all Audit & Supervisory Board members

PresidentInternal
Control Committee

Transitions in Governance at SMM
2000 2001 2003 2004 2006 2007 2011 2012 2015 2016 2017 2018 2019 2021 2022 2023

Management Committee

Introduction of the executive officer system

Operating Department


14

6

7

8

OutsideDirectors
Number ofmembers*4

Outside Audit& Supervisory
Board
members

2

Internal Audit Department

Appointment of an outside director

Appointment of a female director

1



2

3

7 Sustainability
Subcommittees

4 Management
Systems Working
GroupsCorporate Value
Enhancement
Strategic Committee

Percent of Outside Directors on the Board of Directors

DigitalTransformation
Committee

Carbon Neutrality
Committee

Percent of Female Directors

OutsideEstablishment of a GovernanceAppointment of the chair of the Governance Committee
Committee

Optional committees on nomination,
remuneration, etc.

Outside Officers
CouncilInternal

5

Outside Directors Council meeting held

3
3/8
37.5%

Continuing to Support Value Creation

Audit & Supervisory Board Board of Directors

Executive Officers(FY)

Sustainability Committee

Separation ofmanagement andexecution
Number ofmembers*

Independent
Public Accountant

Coordination

Female

1

Male

1/8
12.5%

7



Outside Directors/
Audit & Supervisory
Board Members’
Liaison Committee

Outside Directors/Audit & Supervisory Board
Members’ Liaison Committee meeting held

Executive advisor
systemPercent of Outside Directors in the Governance Committee

Abolition of the executive advisor system
Evaluation of the effectiveness of theBoard of Directors



Takeover defense
measures

Introduction of takeover defense measures

Evaluation of the effectiveness of the
Audit & Supervisory Board

Decision to discontinue takeover
defense measuresOutside officers

Outside

Effectivenessevaluations

Percent of Outside Officers(Directors and Audit & Supervisory Board Members)

Internal

1

3
3/4
75.0%

Internal officers

7

5
5/12
41.7%

Establishment of Corporate Governance Guidelines/Discussion of what the Boardof Directors should ideally be

Guidelines and
Ideal Vision* The Number of members of the Board of Directors and Audit & Supervisory Board are after the General Meeting of Shareholders.

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Continuing to Support Value Creation

Corporate Governance

Governance Committee

What the Board of Directors should ideally be
Positioning Mineral Resources, Smelting & Refining, andMaterials as its three core businesses, SMM aims to realize its
Long-Term Vision of becoming a “World Leader in the NonFerrous Metals Industry.” Since all three businesses are related
to non-ferrous metals, they have a mutual organic relationship and their business contents and scale are such that theBoard of Directors can make decisions itself regarding diverse
management issues. Furthermore, from the viewpoint of thestronger coordination currently being promoted among thethree businesses, it will further stimulate the Company’s
growth if the Board of Directors itself comprehensively makes
decisions rather than giving strong independence to eachbusiness segment and permitting them to make their own
decisions. To this end, we consider that in principle a management model is appropriate for the Company’s governance, rather than a monitoring model that oversees overallbusiness execution after the fact.
Furthermore, in view of the distinctive characteristics of
the SMM Group’s business operations, it is important tostrengthen the management infrastructure (particularly

regarding compliance, safety, and the environment) andtherefore necessary to establish a system whereby Audit &Supervisory Board members can point out issues to directors
and executive officers without hesitation. From this viewpoint, we have adopted an organizational structure of a company with an Audit & Supervisory Board in which Audit &Supervisory Board members with guaranteed independent
authority can be expected to exercise their auditing functions
stably over a period of four years. At present, Audit &Supervisory Board members do not have the right of convocation regarding decisions of the Board of Directors or theright to vote on the Board of Directors. The resulting inabilityof Audit & Supervisory Board members to propose theremoval of a director to the Board of Directors is an issue forcompanies with an Audit & Supervisory Board. We are striving
to overcome this issue by appointing multiple outside directors (at least one-third of members), have them become
members of the Governance Committee, and deal with theappointment and dismissal of directors and executive officers
in the Governance Committee.

4 Governance Committee members(3 outside directors)

Chair: Taeko Ishii (Outside Director)
Meetings held in FY2022: 5 (2 nomination
meetings, 2 remuneration meetings, 1 general
governance meeting)

The Governance Committee is composed of one member who
is the chairman of the Board of Directors, who is not an executive officer, and three independent outside directors. It wasestablished to provide the president with advice from an objective standpoint with regard to particularly important mattersrelating to corporate governance, including the nomination
and remuneration of directors, executive officers, and others.

Decision-Making and Supervisory System

8 directors (3 outside directors)

The Board of Directors has a diverse composition by including both members from within the Company who are thoroughly familiar with each area of the Company’s business aswell as outside experts with knowledge, experience, ability,
insight and other attributes different from that of the members from within the Company and who can supervise management on behalf of shareholders and other stakeholders.
Furthermore, striving for greater managerial transparency,
the Company has a policy of appointing at least one-third ofits directors as independent outside directors, and of theeight directors, three, including one with management experience, have been appointed as independent outside
directors.
Among the Company’s directors, there are four directors
who are also executive officers. Conflicts of interest are
addressed in accordance with Japanese law. There are nocontrolling shareholders.

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 Related to existing and new projects in each business Borrowings and other financing Establishment or revision of important rules and regulations, including policies on human rights, DX, etc.
 Cross-shareholdings held Dialogue with institutional investors Planning and results of auditing by Audit & Supervisory
Board members and internal auditing

Other reports on the progress of sustainability activities are
made at least twice a year. In addition, the status of use of the
Whistle-blowing System (Speak Up System) and the status of
responses are regularly reported. Also, complaints received by
the Japan Center for Engagement and Remedy on Businessand Human Rights (JaCER), a contact point for receiving complaints from suppliers and other external parties, are also subject to reporting as a grievance (remedy) mechanism.
While any matters of critical concern that arise are required
to be reported to the Board of Directors, there were no matters of critical concern reported in FY2022.
In stakeholder engagement conducted by the Board of
Directors, authority is delegated to business divisions for customers and suppliers, to the Human Resources Department
for employees, and to the Public Relations & Investor
Relations Department for shareholders and investors.
The status of dialogue with investors is reported once a year.

Chairman: Koji Imai (Standing Audit &Supervisory Board member)
Meetings held in FY2022: 18

The Audit & Supervisory Board has four members (two standing Audit & Supervisory Board members and two outside Audit& Supervisory Board members). Standing Audit & Supervisory
Board members belonging to the Company gather in-house
information in an accurate and timely manner, and audit operations appropriately based on this information, while independent outside Audit & Supervisory Board members conduct
audits in a manner that takes advantage of knowledge of theirrespective specialist fields and diverse perspectives.
In order to ensure managerial soundness and increase thecorporate value of the Company, and in accordance with theaudit policies, audit plans, and other such matters prescribedby the Audit & Supervisory Board, each Audit & Supervisory
Board member will attend meetings of the Board of Directors
and other important meetings, receive reports from directors,
executive officers, and employees regarding the status of theperformance of their duties, and, through on-site inspection
activities at domestic and overseas business sites, confirm thestatus of business execution, inherent issues, and the establishment and operation of internal control systems. In addition,
information collected by the standing Audit & Supervisory
Board members through inspection of important approval andother such documents and reports from related departments
is shared with the outside Audit & Supervisory Board members
and discussed among all Audit & Supervisory Board members.

Main Agenda Items at Audit & Supervisory Board MeetingsA udit plan of the Audit & Supervisory Board members(monthly and annually)
R esults of the audit of the Audit & Supervisory Board members (monthly and annually)
C onfirmation of each agenda item of the Board of Directors
meeting I nformation on the business environment
A udit report of the Audit & Supervisory BoardR esults of the evaluation of the effectiveness of the Audit &Supervisory Board

Role and function of outside Audit & Supervisory
Board members
In order for the Company to achieve sound management andincrease its corporate value over the medium to long term,
outside Audit & Supervisory Board members are expected to
conduct effective audits based on their knowledge and experience in specialized fields, including finance, accounting, andlegal matters, while maintaining sufficient coordination withStanding Audit & Supervisory Board members belonging to
the Company.
In addition, as part of the audit process, outside Audit &Supervisory Board members are expected to participate in
key meetings, including Board of Directors meetings, and toactively express their forthright opinions from an independent and objective standpoint during the decision-making
process, including not only the legality but also the appropriateness of proposals.
SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Continuing to Support Value Creation

Chairman: Yoshiaki Nakazato(Chairman of the Board without representation)
Term of office: 1 year
Meetings held in FY2022: 17

4 Audit & Supervisory Board members (2 outside Audit & Supervisory Board members)

Main Agenda Items at Board Meetings

Outside directors are expected to perform two functions: anadvisory function and a monitoring function.
Regarding the advisory function, in order for the SMM Groupto achieve sustainable growth and increase its corporate value
over the medium to long term, outside directors are expected
to enhance the quality of decision-making by the Board of
Directors by providing advice and making decisions based on
their experience and other factors, without being bound by
the Company’s conventional way of thinking or frameworks.
Regarding the monitoring function, outside directors are
expected to serve a check function on management from an
independent and objective standpoint via the Board of
Directors, as well as to supervise management on behalf ofshareholders and other stakeholders by providing advice
during decision-making on director nomination, remuneration, and other relevant matters as members of theGovernance Committee.

Auditing System
Audit & Supervisory Board

Directors and the Board of Directors

Role and function of outside directors

103

Continuing to Support Value Creation

Corporate GovernanceCollaboration among the Internal Audit Department, Independent Public Accountant, and Audit &Supervisory Board Members
FY2022, Audit & Supervisory Board members attended suchmeetings 19 times. KPMG AZSA LLC, an independent registered public accounting firm, audits the consolidated financial statements and the effectiveness of the internal control
over financial reporting. Audit & Supervisory Board members
provide details of audit plans to the independent public
accountant. Audit & Supervisory Board members in turn
receive explanations regarding audit plans and reports on
audit results and reports reviewing each quarter from theindependent public accountant. In this manner, close collaboration is maintained between the independent public
accountant and Audit & Supervisory Board members.

Standard for Independence
the independence of outside officers on the Company website.

heads’ hearing results from the Audit & Supervisory Board
members’ on-site audits, a wide range of opinions were
exchanged.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

The Board of Directors will achieve a diverse composition by
including both members from within the Company who arethoroughly familiar with each area of the Company’s businessas well as outside experts with knowledge, experience, ability,

Skills Matrix for Board of Directors
Knowledge, experience, ability, etc. possessed by directors and Audit & Supervisory Board members that theCompany believes will contribute to the effectiveness of the Board of Directors
Name
Yoshiaki Nakazato

GeneralCorporate
Management,
Sustainability

GlobalCapabilityBusiness,
Marketing(International
Experience)

R&D,
Manufacturing,Engineering

Quality,
Safety,Environment

Finance,
Accounting

Akira Nozaki







Toru Higo

Nobuhiro Matsumoto











Masaru Takebayashi











Human
Resources

Taeko Ishii

Manabu KinoshitaKanji Nishiura













Koji Imai
Tsuyoshi Nozawa
Wataru Yoshida

Legal,
ComplianceContinuing to Support Value Creation

104

executive officers, comprehensively considers the knowledge,
experience, ability, insight and other attributes of the candidates in accordance with the same approach as when nominating candidates for director, and the same procedures shallbe used to determine the candidates.
The Governance Committee has opportunities to deliberateon the environment and methods for fostering the next president as well as concerning the candidates. In the event thatan executive officer has rendered himself or herself markedly
ineligible, for example by having acted unlawfully, improperly,or disloyally, and a dismissal recommendation is made to theBoard of Directors after the Governance Committee gives
advice on the matter, and the individual concerned may bedismissed by resolution of the Board of Directors.
With regard to the nomination of Audit & Supervisory
Board member candidates, the policy is for the president toView on the Balance between Knowledge, Experience, and Skills of the Board as a whole,and Also on Diversity and Appropriate Board Size

Category

governance_policy/#Independence

Procedures in the Nomination of Director Candidates, Appointment or Dismissal of Senior
Management, and Nomination of Audit & Supervisory Board Member Candidates
With regard to the nomination of candidates for the Board of
Directors, the president comprehensively considers the knowledge, experience, ability, insight and other attributes of thecandidates with respect to the best lineup for resolving current
and future management issues (including the positive andnegative impacts on the economy, environment, and people,
including human rights, for the sustainable development of
the Company), and proposes suitable candidates to the Boardof Directors. The Governance Committee, which consists of the
Chairman of the Board of Directors who is not an executive
officer and the independent outside directors who supervise
the management team on behalf of shareholders and otherstakeholders, will provide the president with advice. The Boardof Directors makes the final decision after due deliberation.
With regard to the selection of executive officer candidates,
the president, based on the recommendations of thepresident and receiving advice on whether the candidate has
the qualifications, knowledge, experience, abilities, andinsight worthy of a president and director, the president
makes the final proposal to the Board of Directors, whichmakes the final decision after due deliberation.
With regard to the selection of the candidate executive officers who will constitute the pool of candidates for future president, the president, based on recommendations from theexecutive officers, consults with the Governance Committee
regarding the best lineup to resolve the issues management
faces, formulates the final proposal with reference to that advice,and submits the proposal to the Board of Directors. The Board of
Directors then makes the final decision after due deliberation.

WEB https://www.smm.co.jp/en/ir/management/

Outside Directors/Audit & Supervisory Board Members’ Liaison Committee
In FY2022, liaison meetings were held in May and December.
Given reports on most recent internal audit results by theinternal audit department and the overview of department

The succession planning for holders of the office of chief
executive officer (president and director) is conducted andexecuted appropriately on the basis of our corporate philosophy and business plans. With regard to the candidate for the
successor to the president, the Governance Committee(Chair: Taeko Ishii, Director), composed of the chairman of theBoard of Directors who is not an executive officer and three
independent outside directors, has opportunities to deliberate on the environment and methods for fostering the nextpresident as well as concerning the candidates, etc.
Regarding the specific procedure for selecting the successor to the president, after consulting with the GovernanceCommittee about the candidate recommended by the

Directors

All the Company’s outside directors and outside Audit &Supervisory Board members have been declared as independent officers, pledging that there is no conflict of interest withthat of shareholders. We also publish our standards governing

after obtaining the prior approval of the Audit & Supervisory
Board, to propose the qualified candidates to the Board of
Directors, which will then determine the nominations.

The Board’s Engagement in Succession Planning for the CEO and Other Top Executives

Audit & Supervisory
Board Members

The Internal Audit Department regularly undertakes internal
audits on the status of business execution across the SMM Group.
The Department provides an explanation of its audit plansto Audit & Supervisory Board members and the Audit &Supervisory Board while passing on all relevant information.
At the same time, Audit & Supervisory Board members provide details of audit plans determined at meetings of the
Audit & Supervisory Board to the Internal Audit Department,
accompany staff of the Internal Audit Department as required
when conducting internal audits, and attend meetings whenreports on the results of internal audits are delivered to executive officers and the heads of operational divisions. In

comprehensively consider the qualifications, knowledge(including that of finance, accounting, and law), experience,
ability, insight and other attributes of the candidates and,











Shoji Wakamatsu








* Fields in which Directors and Audit & Supervisory Board Members believe that they can make a particular contribution to the effectiveness of the Board of Directors are indicatedwith a “”.

Furthermore, the Company has established the guidelines for fulfillment. For the details, please refer to the final page of the Corporate Governance Report.

WEB https://www.smm.co.jp/en/news/release/uploaded_files/230803_CGR_E.pdf

SUMITOMO METAL MINING CO., LTD.

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105

Continuing to Support Value Creation

Corporate Governanceinsight and other attributes different from that of the members from within the Company. Based on “what the Board of
Directors should ideally be,” as stated in “Reasons for selectionof present corporate governance system,” the skill matrix for
the Company’s directors and Audit & Supervisory Board
members was created and is shown below. Each skill item has
been selected through discussions by the Board of Directors,
focusing on those required to realize the Company’s longterm vision and Vision for 2030. As the knowledge, experience, ability, insight, and other attributes required of theCompany’s Board of Directors may change in response tochanges in management strategies and the external environment, the Board of Directors will continue to discuss the necessary knowledge, experience, ability, insight, and otherattributes, and update the skills matrix as necessary. The sizeof the Board of Directors will be appropriate to conducting
active discussions and ensuring the briskness of the Board.
One-third or more of the Directors will be independent outside directors in order to strive for greater managerialtransparency.

Functions and Roles in Corporate GovernanceOutside Director
Attendance (FY2022)
Board of Directors meetings
17/17 (100%)

Manabu Kinoshita
Outside Director

Attendance (FY2022)
Board of Directors meetings
17/17 (100%)

Kanji Nishiura
Outside Director

Attendance (FY2022)
Board of Directors meetings—

Wataru Yoshida

Outside Audit &Supervisory Board Member
Board of Directors meetings
17/17 (100%)
Audit & Supervisory Board
meetings
18/18 (100%)

Shoji Wakamatsu

Outside Audit &Supervisory Board Member
Attendance (FY2022)
Board of Directors meetings
16/17 (94%)
Audit & Supervisory Board
meetings
18/18 (100%)

Mr. Manabu Kinoshita has a wealth of knowledge and experience in corporate management and digital business. He participates in
the Board decision-making, providing his advice regarding material business and digital fields where the business environment ischanging significantly, which is aimed toward the sustainable growth and medium- to long-term enhancement of the corporate valueof the Group by utilizing his knowledge and experience. He also performs a check function on management by participating in decision-making at the Board of Directors from an independent and objective standpoint, and to oversee the management on behalf ofshareholders and other stakeholders by being involved in decision-making regarding nominations and remunerations of directors andexecutive officers as a member of the Governance Committee. Accordingly, he realizes the further improvement of quality of thedecision-making by the Board of Directors and the enhancement of the monitoring function.
Mr. Kanji Nishiura has abundant knowledge and experience in corporate management, non-ferrous metal business, and various otherbusinesses. Mr. Kanji Nishiura is expected to participate in the Board decision-making, providing his advice particularly on long-term
projects and comprehensive plans aimed toward the sustainable growth and medium- to long-term enhancement of the corporate
value of the Group by utilizing his knowledge and experience. He is also expected to perform a check function on management by
participating in decision-making at the Board of Directors from an independent and objective standpoint, and to oversee the management on behalf of shareholders and other stakeholders by being involved in decision-making regarding nominations and remunerations of directors and executive officers as a member of the Governance Committee. Accordingly, the Company expects that he willrealize the further improvement of quality of the decision-making by the Board of Directors and the enhancement of the monitoring
function, and has appointed him as Outside Director.
Mr. Wataru Yoshida has a wealth of financial institutional experience and knowledge of corporate management. He carries out effective audits, especially regarding finance and overseas projects, based on his own knowledge and experience in order to ensure thesoundness of the Group’s management and improve its corporate value over the medium to long term, while fully coordinating withthe standing Audit & Supervisory Board members. In addition, as part of the audit process, he participates in important meetings,
including Board of Directors meetings, and during the decision-making process actively expresses his frank opinions from an independent and objective standpoint, including not only the legality but also the appropriateness of proposals.

Mr. Shoji Wakamatsu has many years of auditing and management experience at an audit firm and a wealth of knowledge aboutaccounting. He carries out effective audits, especially regarding accounting, based on his own knowledge and experience in order toensure the soundness of the Group’s management and improve its corporate value over the medium to long term, while fully coordinating with standing Audit & Supervisory Board members. In addition, as part of the audit process, he participates in important meetings, including Board of Directors meetings, and during the decision-making process actively expresses his frank opinions from an
independent and objective standpoint, including not only the legality but also the appropriateness of proposals.

WEB https://www.smm.co.jp/en/ir/stock/meeting/pdf/2023/no98_houkoku.pdf

Training Policy for Directors and Audit and Supervisory Board Members
The training of directors and Audit & Supervisory Board members is based on the self-improvement of each individual, andtherefore the Company contributes to self-improvement by
SUMITOMO METAL MINING CO., LTD.

WEB Details are provided in the Corporate Governance Report.

https://www.smm.co.jp/en/news/release/uploaded_files/230803_CGR_E.pdf

Integrated Report 2023

providing opportunities for training either directly or as anintermediary, and provides support for the costs thereof.
Specifically, the Company will provide training on the legal* Growth strategies, measures to strengthen competitiveness, measures toimprove sustainability, etc., set forth in the 2021 3-Year Business Plan

Method of Determining Amount of Performancebased Remuneration, etc.
The amount of performance-based remuneration, etc. is
calculated by adding an amount reflecting individual performance to an amount of position-specific performance-based
remuneration, etc. Moreover, there are no sign-on bonuses or
recruitment incentive payments, termination payments, clawback systems, or retirement benefits.
The details of each calculation method are provided in “Mattersrelated to performance-based remunerations, etc.” of theDocument of Matters Subject to Measures for Electronic Provision
Regarding the 98th Ordinary General Meeting of Shareholders.
WEB https://www.smm.co.jp/en/ir/stock/meeting/pdf/2023/no98_

houkoku.pdf

Matters Related to Performance-based
Remuneration

The concurrent occupations of outside directors and outside Audit & Supervisory Board members (as of March 31, 2023) are listed in
the Document of Matters Subject to Measures for Electronic Provision Regarding the 98th Ordinary General Meeting of Shareholders.

106

Remuneration for directors of SMM is linked to the businessperformance of the Company, and designed to motivate directors to achieve medium- to long-term goals, based on thebusiness structure of the Company, so that it functions as asufficient incentive to contribute to sustainable growth,
increase the corporate value of the Group over the medium tolong term, and to strengthen and maintain the managementbase. When determining the remuneration of individual directors, the amount of remuneration is calculated using a predetermined formula in order to ensure fairness, and the Company
maintains a basic policy of setting remuneration at an appropriate level based on the responsibilities of each director.
Specifically, the remuneration for directors (excluding the
Chairman and outside directors) shall consist of basic remuneration and bonuses. Basic remuneration shall consist of
fixed remuneration (remuneration which is neither performance-based nor non-monetary) and performance-based
remuneration, etc., while bonuses shall be performance-based
remuneration, etc. The Chairman and outside directors shallreceive only fixed remuneration and no bonuses.
Basic remuneration is calculated on an annual basis foreach individual and paid each month in monthly installments, while bonuses are paid once annually after approval is
obtained at the Ordinary General Meeting of Shareholders.

Reason for Selection of Above Indicators
C onsolidated results (profit attributable to owners of theparent, profit before tax)
 Because these indicators are key measures of the Company’s
corporate management performance, and are the profitability
targets that it aims to achieve as part of its long-term vision.
D epartmental results The three absolute values of efficiency, cash flow, and profit wereselected in order to evaluate performance in a balanced manner.
D egree of attainment of personal targets under medium- tolong-term management strategies* Because the steady implementation of plans with a mediumto long-term perspective is essential in order to increase ourcorporate value in a sustainable manner.
 S afety record Because we believe that securing a safe workplace is ouroperating foundation.

The indicators employed by the Company to determine performance-based remuneration include consolidated results(profit attributable to owners of the parent, profit before tax),
departmental results (return on capital employed [ROCE], free
cash flow, and segment income), the degree of attainment of
personal targets under medium- to long-term management
strategies, and safety record (number of industrial accidents).

Continuing to Support Value Creation

Attendance (FY2022)

Ms. Taeko Ishii has specialist knowledge and abundant experience as a lawyer, especially in the field of labor law. Ms. Taeko Ishii participates in
the Board decision-making, providing her advice regarding compliance and personnel/labor related fields, which is aimed toward the sustainable growth and medium- to long-term enhancement of the corporate value of the Group by utilizing her knowledge and experience. She
also performs a check function on management by participating in decision-making at the Board of Directors from an independent and objective standpoint, and to oversee the management on behalf of shareholders and other stakeholders by being involved in decision-making
regarding nominations and remunerations of directors and executive officers as a member of the Governance Committee. Accordingly, sherealizes the further improvement of quality of the decision-making by the Board of Directors and the enhancement of the monitoring function.

lectures by lawyers and other external experts and through othersuch means. Additionally, the Company will provide informationon other training opportunities such as external seminars.
Including the above, the Company will bear the entire
amount of any expenses necessary for director, Audit &Supervisory Board member, and executive officer training.

Basic Policy and Procedures for Remuneration of Directors
Basic Policy

Outside Directors and Outside Audit & Supervisory Board Members

Taeko Ishii

liabilities of officers, compliance, and legal knowledge for newly
appointed directors, Audit & Supervisory Board members, andexecutive officers when assuming office. The Company will
provide various kinds of internal training for directors, Audit &Supervisory Board members, executive officers, and others andendeavor to obtain timely and appropriate information throughAnnual Total Compensation Ratios (FY2022)
Ratio of the average annual total compensation forthe organization’s highly-paid individuals to the totalcompensation for all employees1
Ratio of the percentage increase in average annual
total compensation for the organization’s highly-paid
individuals to that for all employees2

1,039%

71%

1. Average annual total compensation for the organization’s highly-paid individuals is
calculated as annual total compensation for internal directors (plus the employee
salaries of any directors concurrently serving as employees) divided by the numberof internal directors.
This ratio is calculated as average annual total compensation for the organization’s highly-paid individuals divided by the median annual total compensation for
all employees x 100.
2. Ratio of the percentage increase is calculated as the percentage increase in averageannual total compensation for the organization’s highly-paid individuals divided by thepercentage increase of the median annual total compensation of all employees x 100.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

107

Continuing to Support Value Creation

Corporate Governanceat a regular Board of Directors meeting held in February 2023,
where it confirmed its evaluation and discussed its responsegoing forward.

Management Remuneration as an Incentive
The Company’s financial results are significantly impacted byprevailing metal market conditions and exchange rates, andthus do not necessarily correspond with the progress of management strategies and projects. Furthermore, projects
related to resource development and the construction of
smelting and refining plants require extremely long time periods from start to completion, and it is not unusual for thecomposition of management to have changed by the time
the fruits of those projects can be reaped.
Given these characteristics of its business, the Company

has considered how remuneration should operate as ahealthy incentive for individual directors and managers andhas consequently laid down its current remuneration systemcomposed of performance-based remuneration and bonuses
based on consolidated financial results and assessment factors such as the degree of attainment of personal targets
under medium- to long-term management strategies. At
present, we do not believe that remuneration in the form ofCompany stock would effectively operate as a healthy incentive for management, and thus have not introduced it.

Details of Procedures for Determining the Amount of Audit & Supervisory Board Member
Remuneration
The amount of basic remuneration for each individual Audit &Supervisory Board member will be determined by consultation among the Audit & Supervisory Board members at the

Audit & Supervisory Board within the total remuneration
amount approved by the General Meeting of Shareholders.

Overview of analysis and evaluation results1) Response to questionnaire and results of analysis andevaluation of the external evaluator(1) Most of the main items related to the effectiveness of
the Board of Directors received a high overall rating, andthe Board of Directors can be evaluated as generally
functioning effectively.
(2) In the open-ended response section of the questionnaire, many positive opinions were expressed about thecurrent system and operation, and many matters arepointed out as opinions to improve the current
situation.
(3) It is desirable to continue to discuss how the Board of
Directors should deliberate strategies and visions.
Additionally, the matters pointed out in the past fiscal
years (such as securing human resources) should becontinuously discussed about how to make further
improvements toward implementation.

2) Deliberations at the Board of Directors meeting
In response to the external evaluator’s advice, the Board of
Directors conducted deliberations on each of the following
matters.
(1) With respect to deliberations at Board of Directors meetings, some responses suggest that the meetings should
further extend discussions of business strategy, management issues, sustainability, etc. In response to this, theBoard confirmed that the following would be carried out:a. C ontinuously ensure that the agenda includes business strategy and management issues.
b. Extend opportunities to discuss sustainability in addition
to semiannual reports from the Sustainability Committee.
(2) With respect to initiatives related to the matters pointed
out in the past fiscal years (in particular, securing humanresources, etc.), the Board of Directors confirmed thatthey would deliberate them based on the measures ofthe executive side.
(3) The Board of Directors confirmed other matters, such as
extending information that facilitates deliberations of theagenda and providing the Board of Directors with more
effective feedback concerning opinions on capital markets.

Future steps

Total Amount of Remuneration, etc. Paid to Directors and Audit & Supervisory Board Members

The Board of Directors confirmed that steps will be takenwith regard to the above matters in order to improve its
effectiveness in an ongoing manner.

FY2022 Director and Audit & Supervisory Board Member Remuneration
Officer Classification

Total Remuneration

Directors (excluding outside directors)
Audit & Supervisory Board members¥405 million¥68 million

Total amount of remuneration, etc. by remuneration type
Performance-basedNon-monetary
Fixed remuneration
remuneration, etc. remuneration, etc.
¥245 million¥160 million—¥68 million——

Number of Officers
53Outside directors
Outside Audit & Supervisory Board members¥43 million¥24 million¥43 million¥24 million

—
—

—
—

3
2

Directors whose total consolidated remuneration, etc. is ¥100 million or more are disclosed individually in the Company’s Annual Securities Report.

Analysis and Evaluation of the Effectiveness of Auditing by Audit & Supervisory Board
Members and the Audit & Supervisory Board, and the Results
Purpose, etc. of the Evaluation of the Effectivenessof the Audit & Supervisory Board

Analysis and Evaluation of the Effectiveness of the Board as a whole, and the Results
The Board of Directors analyzes and evaluates the effectiveness of its performance from the perspective of appropriate
decision-making for business execution and enhancing monitoring functions. The following is a summary of the results of
the analysis and evaluation of the effectiveness of the Boardof Directors in FY2022.

108

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Analysis and evaluation process
The Board of Directors prepares and conducts a questionnaire to directors and Audit & Supervisory Board memberswith the assistance of an external evaluator (law firm). The
Board of Directors outsources the compilation of responses
and related analysis to the external evaluator. Based upon the
results of the questionnaire, the evaluation by the external
evaluator, and the confirmation of what the Board of
Directors should ideally be (aim to achieve a Board of
Directors focused on decision-making function) conducted in
FY2016, the Board of Directors reviewed its own effectivenessIn order to ensure managerial soundness and increase thecorporate value of the Group, the Audit & Supervisory Board
members audit the execution of duties by directors and executive officers in accordance with the audit policies, audit
plans, and other such matters prescribed by the Audit &Supervisory Board. Through this evaluation of effectiveness,
the Audit & Supervisory Board reviews its own audits andactivities, examines issues to be improved and measures tobe taken, and reflects them in the next year’s audit plan anddaily audit activities, thereby establishing a PDCA cycle.

Evaluation process
In order to carry out the evaluation from an independent andobjective standpoint, we requested advice on analysis andevaluation from Misono Sogo Advisory LLC, an outside

professional organization. Based on the results, the Audit &Supervisory Board discussed the matter and conducted theevaluation. The specific evaluation process included a questionnaire of all Audit & Supervisory Board members, interviews
with the chairperson of the Audit & Supervisory Board (Senior
Standing Audit & Supervisory Board member) and with theadministrative office of the Audit & Supervisory Board by anoutside professional, and discussions with participation by all
Audit & Supervisory Board members (four times in total).

Continuing to Support Value Creation(excluding outside Audit & Supervisory Board members)

Overview of evaluation results
The Audit & Supervisory Board confirmed the following
points and evaluated that the audits and activities of the
Audit & Supervisory Board members were functioning welland sufficiently effective.
• Through their attendance at Board of Directors meetings,
discussions among Audit & Supervisory Board members,
and auditing activities by Audit & Supervisory Board

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109

Continuing to Support Value Creation

Corporate GovernanceFuture steps
Through discussion among all members, the Audit &Supervisory Board defined the roles of the Company’s Audit &Supervisory Board as follows: Monitor and restrain the management, have a strong sense of involvement in corporate
management under the condition that they are non-executive, and provide the management with objective opinions as
Audit & Supervisory Board members based on their professional insights and experience.
For Audit & Supervisory Board members to fulfill theseroles, it is necessary to have initiatives whereby they understand the corporate management from an objective perspective and respond promptly and flexibly in light of internal andexternal changes. Therefore, the Audit & Supervisory Board
confirmed that as matters to be focused on this fiscal year thefollowing actions will be taken.
• Regular reflection by the Audit & Supervisory Board tomaintain an objective perspective on management andfulfill their role as Audit & Supervisory Board members• Further enhancement of on-site audit activities by improving information sharing by full-time Audit & Supervisory
Board members to outside Audit & Supervisory Board
members in advance of on-site audits, etc.
• Strengthening communication with departments by clarifying our awareness of issues (topics) identified through day-today Audit & Supervisory Board member activities (considering
topics such as the Company’s function of corporate planning)• Updating information and knowledge about corporate
management and other important topics, including providing training by external instructors.
In addition to the above, we have confirmed that we willcontinue to examine specific issues identified in the processof evaluating the effectiveness, and strive for improvement.
By further improving the effectiveness of audit activities, theAudit & Supervisory Board and its members are striving tocontribute to strengthening the management infrastructure
and improving the corporate value of the Group.

Business Execution Structures and System
Management Committee
The membership of the Management Committee includes
the president, senior managing executive officers, and otherrelated executive officers, and its meetings may also beattended by the chairman of the Board of Directors, outside
directors, and Audit & Supervisory Board members.
The Management Committee deliberates on importantmatters requiring careful consideration from a wide range ofperspectives prior to their submission for the Board of110

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Directors resolutions or approval by the president, deciding
whether or not matters should be submitted to the Board of
Directors, and assisting the president’s decision-making.
When making investments or equity contributions, we use
a project risk check sheet for committees, primarily theManagement Committee, to carry out deliberations regarding human rights issues such as discrimination, forced labor,
and child labor, and also the political system, economy, law

and order, locally-specific diseases, labor issues, religious
restrictions, and the impact on the local community. In
FY2022, one new investment agreement was proposed to
the Management Committee, which conducted screening forhuman rights issues and confirmed the investment to be
unproblematic. We will continue to carry out regular monitoring in the future. No projects were withdrawn.

Sustainability Committee* and Internal Control
Committee
The Company has systemized its social and environment initiatives as sustainability promotion activities and is expanding
them throughout the Group. In order to promote these activities, the Sustainability Committee (headed by the president)
has been established. 7 Sustainability Subcommittees andfour Management System Working Groups have also been
established under the Sustainability Committee, and theCompany has also established the Corporate Value
Enhancement Strategic Committee, Digital Transformation
Committee, and Carbon Neutrality Committee.
* Sustainability Committee

Refer to p.82

Cross-Shareholdings
When advancing our business strategy, the Company may
engage in strategic shareholdings with business partners orother companies if it is judged that doing so will contribute tostrengthening our business base over the medium to longterm. With regard to existing cross-shareholdings, the Board of
Directors verifies aspects such as the objectives of holdings andwhether the benefits therefrom cover the Company’s cost ofcapital every year. As a result of this verification, with regard toshares whose holding is judged to have little significance,
including shares considered no longer worth the cost of capitaland shares judged to have become less relevant due to recent
business changes, we will proceed with concrete consideration
based on the premise of reduction. Furthermore, in cases wherea company cross-holding the Company’s shares expresses adesire to sell, we will not prevent such a sale, etc. by suggestinga reduction in the size of the transaction, or by other means.
With regard to the exercise of voting rights in cross-shareholdings, the Company determines whether to vote for or against
each proposal after giving comprehensive consideration, basedon the financial results and other aspects of the financial condition of each of the issuing companies, to matters such as whether
each proposal will contribute to increasing the corporate value of,or enhancing shareholders’ interests in, that company over the
medium to long term, and what impact it will have on the
Company’s corporate value or shareholders’ interests. In order todetermine whether to approve or reject proposals, the Company
will engage in dialogue with the issuing company regarding thecontents of each proposal, etc., as necessary. Decisions on voting
are made particularly cautiously in circumstances such as cases ofcompanies affected by major scandals or by persistent losses.
Number of Issues Reduced (stocks other than unlisted stocks)
Whole salePartial sale

FY201800FY20194
1

FY20203
1

FY2021
2
3

FY2022
5
3

Relationship with PT Vale Indonesia Tbk
SMM owns 15% of the stock of PT Vale Indonesia Tbk (PTVI), a
company in the Republic of Indonesia, and has entered ashareholder’s agreement with Vale Canada Limited and PT
Indonesia Asahan Aluminium (Persero), a state-owned
Indonesian company, to jointly manage the company. In
addition, we have also signed an agreement with these twocompanies and PTVI, which gives us the right and obligation
to purchase production from these four companies. Due tothis, SMM has the right and obligation to purchase 20% of theagreed annual production from PTVI’s Sorowako mine.
One of the conditions for obtaining the mining businesslicense required for PTVI to continue operations after 2025
was to increase the Indonesian equity stake in the company.
In FY2020, SMM sold a portion of its PTVI shares and excluded
PTVI from its equity-method affiliates.
Investment shares held for purposes other than pureinvestment (stocks other than those unlisted stocks,
including deemed holdings”)(million yen)
400,000

61

57

55

300,000
200,000

148,113100,000
0
(FY)

2018

213,21249,706
115,735

163,506

2019

2020

53

(number of issues)
60

48

251,066
85,039244,11588,376

166,027

155,7392021

Continuing to Support Value Creation

members, the Audit & Supervisory Board members haveconducted audits based on a perspective of appropriatenessand made necessary representations of their opinions.
• The Audit & Supervisory Board members, including outside
Audit & Supervisory Board members, have attended
Management Committee meetings, Sustainability Committee
meetings, Internal Control Committee meetings, and otherimportant meetings, and checked the status of business execution by directors, etc. and whether the internal control system isproperly maintained and operated. They have also actively
expressed their opinions based on their insight and experience.
• The Audit & Supervisory Board members have regularly conducted interviews with executives, including representative
directors, have established an atmosphere where they can
openly exchange opinions, and have made recommendations as necessary.
• On-site audits at domestic and foreign sites, including
offices, mines, plants, and affiliated companies, are conducted by a Standing Audit & Supervisory Board member
and an Outside Audit & Supervisory Board member as a pair
(24 sites were visited in FY2022). Through these site visits,
Audit & Supervisory Board members have checked with
their own eyes the business execution status, specific issues,and how the internal control system is maintained andoperated, and provided advice as necessary.
• At meetings of the Audit & Supervisory Board, the Standing
Audit & Supervisory Board members have shared information
they collected through inspection of important approval andother such documents and reports from relevant divisions, aswell as the results of their audit activities, with Outside Audit& Supervisory Board members, and have held discussions.
• Outside Audit & Supervisory Board members spend enough timeand effort to fulfill their duties adequately, including on-site audits.
• Audit & Supervisory Board members share information andexchange opinions with Outside Directors at meetings or inother ways.

2022

45
30
15
0

 Amount of cross-shareholdings (excluding PTVI) (left axis)
 Amount of PTVI recorded in cross-shareholdings (left axis)
Number of issues held (right axis)* F or FY2020, the number of issues held increased by one due to the exclusion of
PTVI from the equity-method affiliates.

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Continuing to Support Value Creation

Round-table Discussion with Outside Directors
We asked our outside directors what their role is in creating an open and vibrant organizational climate andsecuring, fostering, and utilizing powerful human capital.

(Left) Manabu Kinoshita(Center) Taeko Ishii(Right) Kanji Nishiura

The Company has reformed its personnel system to secure, foster, and utilize human capital in order to respond to achanging business environment and strengthen the management foundation. The outside directors discussed thepoints they focus on to promote the concepts behind the redesigned personnel system for managerial track employees and change the corporate culture with the aim of firmly embedding an open and vibrant organizational climate.

What makes the ideal person for realizing
sustainable growth?

What progress and results have there been on
securing, fostering, and utilizing human capital,
which was set out as a challenge?
Ishii: Initiatives such as fostering human capital through a collaboration agreement with universities and raising the Company’s profile
through TV commercials are producing results. At meetings of the Boardof Directors in FY2022, we took time
to discuss the Company’s issues ahead of the reform of thepersonnel system. In these discussions, I pointed out the differences with other companies from an outside perspective,
and recommended that the Company actively recruit experi-112

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What is important for fostering and promoting an
open and vibrant organizational climate?
Kinoshita: An open corporate culture is needed as the basis
for fostering an open and vibrant organizational climate. A
culture that tolerates mistakes facilitates the honest expression of opinions, and achieving this requires equal relationships between supervisors and their team members in asense. The core of corporate culture must change to reducethe “waiting for instructions” mentality.
Ishii: The question of whether it is possible to speak freely andopenly is a matter for the organization and supervisors, rather
than human resources. No matter how much you are told tospeak out freely, it is difficult to do so if the environment is notconducive. Therefore, it is necessary for executives and managers to think about how they interact with their team members.
Nishiura: I understand that corporate culture or culture issomething that emerges, rather thansomething that is made. Many companies carry out employee awarenesssurveys. However, if improvements
are needed in light of the results, I
think the management team needs to be broad mindedenough to allow what emerges and to make very minor revisions, rather than leading from the top.
Kinoshita: I propose that improving employee engagement
is the shortest route to changing corporate culture. In thepast, the awareness survey was every three years, but it will
be conducted every year from 2023 after I requested anannual survey. It is important to follow up on the issues seenin the survey results. Officers should listen directly to opinions
in the workplace and have honest discussions with employees and then consider putting any important issues on theagenda for the Board of Directors.
It is concerning that affiliated companies score lower basedon the results of the engagement surveys. Engagement tends
to be low at organizations with compliance and safety issues,
so I think this is an area where the Company, which places anemphasis on safety, needs to take some serious measures.
Nishiura: I would like to see the executive side takeresponsibility for creating an open and vibrant organizational
climate by setting an engagement survey score for executive
officers to aim for as a KPI.

What is the role of the Board of Directors inrealizing the sustainability of the Company?
Kinoshita: The biggest personnel-related theme for the
Board of Directors is the nominationof successors. Opportunities for discussing the type of future managers
from a long-term perspective areneeded to ensure the sustainabilityof the Company, which has many long-term projects. The skill
set of the directors reflects the type of people needed to
implement the corporate strategy. I feel there is a lack of discussion on whether we have the human resources required,what kind of training to provide, and how to develop humanresources over the long term.
Nishiura: The outside directors can never know more about
the Company’s business and strategy than the executive side.
As outside directors, we must always ask for provision of information on what kind of candidates there are.
Ishii: Opportunities have been created for the outside directors to have discussions with the executive officers who are
the candidates for future management human resources.
During these discussions, I try to understand the thoughts
and direction of each candidate and provide my opinionsfrom an outside perspective.
Nishiura: As an outside director, I will closely look at whether
there are substantive discussions. I would like to see changes
in the Company from the perspective of employees throughthe redesign of the personnel system.
Kinoshita: As outside directors, we have the same passion formaking the Company even better and want to work together
to achieve it.
Taeko Ishii
Ms. Ishii was registered as a lawyer in 1986. She is a member of the Dai-ichi
Tokyo Bar Association. She is particularly knowledgeable about legal practiceconcerning relationships between labor and management, and also provides
counsel to the Company regarding compliance. Published works include“Legal Practices for Handling Problem Employees,” and “A Q&A on Practice
Relating to Equality Law, Childcare and Caregiver Leave Law, and Part-timeWorker Law.” She has served as an outside director at SMM since 2018.

Continuing to Support Value Creation

Director Taeko Ishii: I believe it is a person who finds theirwork rewarding and works energetically with curiosity on
new things, who takes the initiative and is willing to take on achallenge. To begin with, I think it is necessary to determine
what kind of human resources are needed in each segment
and the requirements in terms of their expertise and the
direction in which they are heading. At present, I feel the discussion is limited to the number of employees recruited andthe retention rate.
Director Manabu Kinoshita: The world has changed significantly with the evolution of AI, and the type of humanresources needed has also changed. As such, I believe therole of human beings is to go into society, notice changes,
and co-create new businesses based on dialogue and empathy with all kinds of people. In the future, there will be moredemand for human resources with a human touch who are
the opposite of AI.
Director Kanji Nishiura: I place an emphasis on the degree
to which human resources possess integrity and the potential
they have. As an organization, the ideal is to have a large
number of inspiring people who can always do the rightthing and get to the essence of things.

enced professionals for new and specialist areas.
Kinoshita: The redesign of the managerial track personnel
system is a major step forward in the implementation of the2021 3-Year Business Plan. Until now, the Company’s personnel system was still based on seniority. However, I believe thereforms are a major breakthrough for the promotion ofyounger employees and active participation of women. The
managerial track personnel system is an important issue witha high level of employee interest. A perfect personnel system
is impossible, so it is important to review it every year, andensure the personnel system that is established is one thatsatisfies all employees. As the Board of Directors, we recognize we also have a responsibility for how we evolve the personnel system in the future.
We also had vigorous discussions around the issue of diversity,
but I feel our discussions around making use of the older generation of employees are still inadequate. Also, even if we increase
the recruitment of experienced professionals, we recognize thatthe question of whether the recruited human resources canreach their potential in this organization is also related to thecorporate culture, which is a management response issue.
Ishii: There has been progress on information disclosure
related to the percentage of women in management positions and the male-female wage differential, and the awareness of workers is also changing. Today’s students are very
interested in initiatives related to diversity and human rights,
regardless of gender, so this is an area the Company should
focus on in order to attract highly-motivated students with ahigh level of awareness. During my discussions with female
employees, I tell them it is important to take on challenges.
However, I believe it is also important for executives andmanagers to be aware of encouraging female and younger
employees to take on challenges.
Nishiura: Sustainability in attracting and retaining humanresources is essential for a company with a long history toensure its sustainability as a company. A company’s ability tosecure human resources is based on building a personnel
system that provides the environment and conditions thatmake employees want to continue working at the company
for as long as possible as well as continuing to provide places
and opportunities for employees, including those hired as
experienced professionals, to reach their potential. Even a
personnel system that is reformed in step with the changing
times starts to become obsolete from the day of the reform,
so the substance must be periodically verified.
Ishii: The Company has solid foundations based on over 430
years of history and the Sumitomo Business Spirit. Even though
values are diversifying, I think that everyone who wants to join
the Company is basically moving forward in the same direction.
Based on the culture and traditions produced by these factors
and the changing times, the management team will consider
the question of what kind of corporate culture to foster together.

Manabu Kinoshita
Serving in positions including Senior Executive Vice President of NEC
Corporation, Mr. Kinoshita has extensive knowledge and experience in corporate management and digital businesses. The Company expects that he willoffer counsel making use of his knowledge in the digital sector and his experience with developing solutions through joint value creation together withother industries. He has served as an outside director at SMM since 2020.

Kanji Nishiura
Serving in positions including Representative Director of Mitsubishi
Corporation, and currently as Representative Director and Deputy Presidentof Mitsubishi HC Capital Inc., Mr. Nishiura has extensive knowledge andexperience in corporate management, non-ferrous metal business, andvarious other businesses. He was newly appointed as an outside director at
SMM in 2023.

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Continuing to Support Value Creation

Tax GovernanceApproach and Policy
The SMM Group comprehensively investigates and examines the relationships of its products to customers andlocal communities to develop business in a sustainable manner. Through sound corporate activities, we work
toward the maximization of our after-tax profit and free cash flow to maximize corporate value and achieve ourlong-term vision.
As part of this, we also examine matters in terms of taxation, such as the status of tax treaties with countries wheremines or plants are located, areas near key customers and markets, and countries where we do business. By continuing
to comply with international tax standards and other related matters, and by fulfilling our tax filing and payment obligations appropriately and fairly, we will strive to coexist with local communities and countries where we do business.
The Sumitomo Metal Mining Group’s Basic Policy on Taxes, established and announced on April 1, 2021 with theapproval of our Board of Directors, is based on this approach.

Decision-Making Concerning Taxes, Oversight by the Board of Directors, and the Role ofAudit & Supervisory Board Members
At SMM, an executive officer is responsible for the Finance &Accounting Department, which is in charge of taxes. The officer
manages and oversees the daily execution of tax-related duties thatare performed by the department staff.
We work to improve and operate our tax governance system,with the president and the Board of Directors playing roles as noted
below.


Sumitomo Metal Mining Group’s Basic Policy on Taxes
Basic Policy
Sumitomo Metal Mining (SMM) will, in the conduct of tax affairs associated with business activities, define the basic policy on taxes herein,
pursuant to the SMM Group Corporate Philosophy that dictates “SMM, in accordance with the Sumitomo Business Spirit, shall, through theperformance of sound corporate activities and the promotion 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 ever greater trust.”
In addition, SMM and all Group companies will make known to and instill in employees the activities that place importance on compliance focus, maximization of corporate value, and appropriateness and fairness.

1. Tax-related internal controls

2. Compliance with tax laws, etc.
Business activities will be conducted in compliance with the tax laws, tax
conventions, and other relevant laws and regulations applicable in eachcountry and region, as well as tax-related standards and guidelines published by international institutions and others such as the Organisation for
Economic Co-operation and Development (OECD).

3. Treatment as part of business activities
SMM and all Group companies will practice the tax studies and implementation related to any business process and transaction as part of business activities, since tax-related risk and tax expenses are closely linked to businessprocesses and individual transactions arising from such business activities.
SMM and all Group companies will work to minimize global tax risk,such as double taxation related to business activities, through advancepricing arrangements with the tax authorities, consultation with outside
experts, and other means. At the same time, SMM and all Group companies will seek to maximize corporate value and achieve its long-term vision,
through proactive and constant efforts to utilize tax incentives and optimize tax expenses, tax payment periods, and other factors so that it can
maximize after-tax profit and free cash flow.
However, the following types of transactions will not be practiced:
1) Transactions aimed solely at avoiding tax, such as transactions using
tax havens; and114

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

2) Transactions that avoid tax through the transfer of income in forms thatclearly depart from the Group’s business objectives and economic realities.

4. Response to transfer pricing
International transactions between SMM and all Group companies will be
performed using arm’s length pricing that is calculated based on methods
reflecting the transaction details, industry practices, or functional and risk
analysis. In conducting a functional and risk analysis of each transaction,
there will be compliance with tax-related standards and guidelines published by international institutions and others such as the OECD.

The arm’s length pricing methods primarily applied:1) Method based on market price according to an appropriate benchmark in line with industry practice; and2) Method based on appropriate allocation of profits corresponding to
the level of contribution founded on a functional and risk analysis.
5. Fair and appropriate tax
SMM and all Group companies will appropriately fulfill its tax payment obligations in compliance with applicable tax laws and other legal requirements
at business activities in each country and region. In addition, SMM and allGroup companies will seek to increase tax transparency and to build a constructive and fair relationship with the national or regional tax authorities.

T ax filing and payment in the Group are handled at the level of individualcompanies, after confirmation of content by representatives of the companies. The Company files and pays income and other taxes as a company
after approval by the president. When a tax audit is conducted, the executive officer in charge of the Finance & Accounting Department reports on
the progress of the audit to the president. In cases in which additional
payments or tax refunds arise due to differences with tax authorities ininterpretations or opinions concerning laws and regulations, the matter ishandled with the approval of the president.









 udit & Supervisory Board members verify the appropriateness of financial
A
closing operations, including tax calculations and tax effect accounting,through audits conducted by the independent public accountant. In addition, when necessary, they pose questions to the independent public
accountant to clarify tax-related issues.
 udit & Supervisory Board members receive reports from the internalA
audit department and the independent public accountant regarding theresults of their evaluation of the effectiveness of the development andoperation of the internal control system for financial closing operations,
including tax-related matters, and subsequently review the contents of
the reports.
 hen the president approves the filing and payment of income or otherWtaxes on behalf of the Company, the Audit & Supervisory Board members
review the documentation to confirm that filings and payments are properly managed within the Company.
 hen the president approves the development of a tax policy, the Audit &W
Supervisory Board members review the documentation and confirm thatthe tax policy is properly developed within the Company.

 hen making decisions on matters such as investment projects, theWGroup conducts examinations that include tax-related matters and risk
assessments. Particularly important projects are taken up by the Board of
Directors for approval.

Initiatives for Tax-Related Compliance
Compliance* is the cornerstone of the Group’s corporate activities.
In accordance with the Sumitomo Metal Mining Group’s Basic Policy
on Taxes, the SMM Group endeavors to adhere to tax laws, tax treaties, and other relevant laws and regulations applicable in the countries and regions where its mines or plants are located. Additionally,

the Group follows tax-related standards published by internationalorganizations such as the OECD. As part of these efforts, we not
only ensure our operations comply with laws and regulations, butalso provide education and training to our staff.
* See Compliance,

p.116-119

Continuing to Support Value Creation

At SMM and all Group companies, all persons (corporate officers including
executive officers, and employees including fixed-term and temporary
employees) engaged in considering or implementing tax-related businessprocesses or individual transactions will share this Basic Policy and ensure
tax transparency.
SMM and all Group companies will also seek to resolve tax issues for theentire Group and at each company, by maintaining a system that manages
tax risk in each country and region and by business process and that sharesinformation globally.

T he Company has established, maintains, and effectively operates aninternal control system for financial closing operations that enables theGroup to conduct appropriate accounting work, reporting of results, andother tasks, including tax-related matters. The Internal Audit Department
evaluates the effectiveness of the internal control system, and reports theresults to the president.

The Audit & Supervisory Board members ensure the appropriateness of tax-related practices and policies through the following roles.

6. Tax-related responsibilities and structure
SMM and all Group companies’ tax activities will manage tax risks on a
global basis and implement appropriate and fair tax treatments, subject tooversight by the executive officer in charge of SMM’s Finance & Accounting
Department, through the employees in charge of tax matters in the
Finance & Accounting Department and the Group companies of relevant
divisions operating in their respective countries and regions.
Moreover, employees with tax expertise will be assigned as necessary;and education and opportunities to increase tax knowledge will be provided to employees involved in tax considerations and implementation forbusiness processes and individual transactions.

Tax-Related Information Collection and Initiatives Involving Government, etc.
Through our activities as a member of the Japan Mining
Industry Association, we make inquiries, collect information
on, and express opinions to governmental agencies withregard to matters such as industrial policy and tax reform.
When the Group encounters issues involving interpretationsof laws and regulations or specific procedural matters, wework to properly carry out tax-related matters through priorinquiries and consultations with tax authorities and outside
experts.
* See Income Tax by Country or Region,

p. 37

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Continuing to Support Value Creation

ComplianceApproach and Policy

Initiatives

Our Group seeks to contribute to society and fulfill its responsibilities to its stakeholders through the performance of sound corporate activities. Under the philosophy that compliance is fundamental to corporate activities, we have established the SMM Group Code of Conduct and the Basic Compliance
Regulations, to serve as specific guidelines for officers and employees. Further, we have established thefollowing policies and regulations regarding individual focus areas such as human rights and procurement, which is shared across the Group.
Sumitomo Metal Mining Group Policy on Human Rights

Sumitomo Metal Mining Group Sustainable Procurement PolicySumitomo Metal Mining Group Basic Policy on TaxesRegulations on insider trading prevention and information managementRegulations on the safeguarding of personal information

Regulations for export control

Regulations for the prevention of bribery

Regulations for observance of competition law

Regulations on the Whistle-blowing System (Speak Up System)

conducts deliberations and exchanges information on material issues related to compliance. A system is in place whereby
measures shared in the Working Group are cascaded to thenecessary employees through our organizational structure
and reflected in daily operations.

Compliance
Working Group

Report on initiatives

Department in charge(business division, etc.)

Business sites(plants, mines, Group companies, etc.)
Whistle-blowing

Speak Up System

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Response

Employee

If a compliance incident (including GRI 2-26, “Responsible corporate conduct in organizational business activities and business relationships”) occurs or is likely to occur in our Group, it
must be promptly reported to the General Manager of theLegal Department and other relevant departments throughour organizational structure. Further, a system is in place
whereby the issue is reported to the Representative Director,
standing Audit & Supervisory Board member, etc. through the
General Manager of the Legal Department, and finally to theBoard of Directors. When an incident occurs, measures aretaken to identify the cause of such incident, formulate measures to prevent recurrence, and if necessary deployedhorizontally.
Further, the Compliance Working Group promotes compliance across the entire Group by analyzing causes of incidents,and shares information aimed at preventing recurrence.

The SMM Group has established the Basic Policy forCompliance with Competition Laws. Under this Basic Policy,
we set out regulations for the observance of competition law
and created a manual for compliance with competition laws,
covering the content of the Basic Policy and rules.
Operations of the prior notification system (a system thatin principle requires prior notification when contacting competitors) based on the regulations for observance of competition law came into effect on April 1, 2022.

Initiatives on Export Control
Based on the regulations for export control, the SMM Grouphas established the Export Control Committee and strives forcompliance with the Foreign Exchange and Foreign Trade Act
and other laws and regulations related to exports. Internal
systems for the management of “deemed export” was put inplace by FY2021.

Compliance Status
The results of checking FY2022 compliance status show that
there were no serious legal or regulatory violations, including
those related to the environment, products, service, marketing, tax, anti-corruption, and anti-competitive behavior. In
addition, there were no fines or penalties reported in the consolidated financial statements or in the financial information
submitted to public institutions in FY2022, and there are nofines or penalties that are currently pending and could berecorded in the provisions of the balance sheet in financial
statements.

Whistle-blowing System (Speak Up System)

Continuing to Support Value Creation

President

PolicyThe SMM Group engages in initiatives to prevent corruption.
These include a prior approval system based on the Basic
Policies for Anti-Bribery and regulations for the prevention ofbribery, mandating prior approval by an authorized person in
specified cases of provision of benefits to subject persons inJapan or overseas. Further, an anti-bribery manual was formulated based on the characteristics of each business and country/region, as well as legal and regulatory conditions. Eachbusiness division and the Legal Department work together toprevent corruption under the supervision of the officer overseeing compliance.

Compliance with Competition Laws

Sustainability
Committee

Chair: Executive officer in charge of
the Legal Department
Deputy Chair: General Manager ofthe Legal Department
Members

In FY2022, the Group-wide compliance goal of “Zero compliance violations that may seriously damage business” was set.
The following priority initiatives were identified as focus areasand implemented sequentially and promoted within eachdepartment: 1) review of our compliance management system, 2) thorough line management to eradicate intentional
fraudulent acts that may result in serious damage to the business, and compliance violations that can lead to rescission of
permits, and 3) departments in charge of laws and regulations gradually start to handle matters that pose a serious
threat to operations or high reputation risk.

Initiatives on Preventing Corruption

Responding to Compliance Issues

Promotion StructureWith the president bearing ultimate oversight responsibility
for compliance, we strive to promote compliance throughour organizational structure. The Compliance Working Group,
which operates under the Sustainability Committee and isserved by the Legal Department as secretariat, regularly

Initiatives to Take on Issues and Provide
Improvements

In accordance with the enforcement of the amended
Whistleblower Protection Act that came into effect on June 1,
2022, we have revised our Whistle-blowing System. Provisions
thereof are incorporated in the newly established Regulations
on the Whistle-blowing System, independent from the “Basic
Compliance Regulations.” The new regulations provide
detailed information on matters concerning the handling ofwhistleblower reports and reports to the Board of Directors,
etc. of violations of laws and regulations discovered because

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Continuing to Support Value Creation

Complianceof such reports. Employees of our Group (excluding certain
affiliate employees operating their own whistle-blowing system) can provide information directly to the internal reporting hotline, SMM Group Whistle Blowing System (Internal:
General Managers of the Legal, Safety & Environment Control,
or Internal Audit Departments; External: Attorney. However,depending on the matter, further responses may be conducted by the Audit & Supervisory Board) for not only mattersthat are in violation of laws and regulations, but also concerns
or questions in line with the SMM Group Code of Conduct.
The Whistle-blowing System covers not only matters experienced by individuals, but also those that are raised for the
purpose of seeking advice regarding responsible corporate

conduct within the business’ activities and transactions(including those related to GRI 2-26).
In FY2022, a total of 11 incidents were reported across theGroup, including those reported to affiliated companies’ independent hotlines. In addition, three consultations werereceived by employees and others.
Further, to understand whether the Whistle-blowing
System is instilled throughout the Group, an employee
awareness survey asks questions regarding whistleblowing
and compliance, the results of which are analyzed. In addition, the General Manager of the Legal Department gives lectures on compliance and the Whistle-blowing System during
regularly held training sessions.

Number of reports received (FY2022)

Participants of Compliance Education (FY2022)

Category

NumberHuman resource systems

1

Power harassment

6

Workplace communication

2

Privacy1

Violation of employment regulation by employees

1

Relationships with business partners

1Business processing

1

Quality errors

1

Total

14

Eleven consultations were received through the Whistle-blowing System, with three
additional consultations through other means.
One matter related to GRI 2-26 (systems for seeking advice and raising concerns) was
raised, which was in duplicate of the abovementioned consultation.
All reports were handled appropriately.

Type of seminar
Compliance seminar for general managers
Compliance seminar for officers
Introduction to import/export trade control
Briefing on the Revised Competition Law
Compliance ProgramJCO Study Center training
Training for new employees
Training for mid-career hires
Seminar for newly promoted employees(section managers)

Classification Participants

Officers

25

SMM Group Code of Conduct (Revised on October 1, 2022)
All officers and employees shall act in accordance with the following Code of Conduct so as to live up to the SMM Group
Corporate Philosophy.

1. Compliance: Abidance by Laws and Rules

10. Collection, Management and Usage of Information

 We will comply with foreign and domestic laws and rules, and conform to social norms.
 We will never under any circumstances commit an infraction of thelaw or act counter to social norms, even if doing so would seem to
be in the company’s interests.

 We will collect information swiftly, properly and lawfully, manage itappropriately, and use it effectively.
 We will utilize information acquired in conjunction with corporate
business expressly for that purpose only, and will not leak suchinformation to any third party.

2. Respect for Individuals

11. Handling of Intellectual Property We will accept diversity and respect the individuality and rights ofpeople.
 We will never violate human rights, engage in discriminatory conduct, or contribute to such conduct.

 We will nurture and maintain conscious recognition of the importance of intellectual property as a vital asset of the Group, andstrive toward the creation of such property.
 We will strive to properly protect and effectively use all corporate
intellectual properties; we will also respect intellectual propertiesof other parties.

3. Assurance of Health and Safety We will give highest priority to ensuring the physical and emotional health and safety of all persons affected by our operations.

4. Development of Human Resources

Employees

1,215 We will strive to nurture junior colleagues and successors throughsystematic training and by providing them with opportunities toplay an active role, and will take steps to help them shape theircareers.
 We will pursue self-improvement with an awareness of our own
growth.

5. Risk Management We will strive to identify risks, prevent their occurrence, and if risks
occur, minimize the effects.

6. Adherence to a Progressive Stance We will approach transformation with a positive and progressive
attitude without clinging to conventions and practices.

 We will place high value on teamwork, in the form of cooperation
both with other organizations and with fellow employees.
 We will contribute to creating a free and open-minded workplace
conducive to the smooth transfer of required information and thetimely performance of reporting, liaison and consultation.
 We will strive to foster a corporate culture in which people accept
and believe in each other and respect diverse values.

8. In Harmony with Society and Local Communities As members of society, we will participate in social contribution
activities in accordance with our personal beliefs.
 We will strive toward a harmonious and mutually beneficial relationship with local communities.

9. Separation of Corporate Business and Personal Affairs We will at all times conduct ourselves based on sound judgment,
and make a clear distinction between corporate business and our
personal affairs.

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 We will continuously improve quality management systems andprovide products and services that satisfy customers.
 We will enhance technologies and seek to engage in manufacturing that takes into account customers’ safety and theirenvironment.

13. Stance toward Performance of Sales and Purchasing We will comply with competition laws and conduct sales and purchasing activities based on fair competition.

14. Stance toward Entertainment and Gifts
 We will entertain and present gifts to others, and accept entertainment and gifts, within the proper limits of both the law and social
acceptability.
 We will comply with laws against bribery and will maintain healthy
and proper relationships with government and politicalorganizations.

15. Severance of Relationships with Socially Disruptive
Forces We will staunchly eliminate socially disruptive forces and have no
relations whatsoever with them.

16. Concern for the Global Environment We will act in a manner that enables us to contribute to solving
global environmental problems by reducing greenhouse gas emissions, taking biodiversity into consideration, and making effective
use of water resources so as to create a decarbonized society, anadvanced Sound Material-Cycle Society, and a society in harmony
with nature.

Continuing to Support Value Creation

7. A Prideworthy, Rewarding, and Joyful Workplace

12. Assurance of Quality

17. Attitude in the Performance of Global Business
Activities We will strive to interact with people in the countries or regions
where we undertake business and engage in conduct that
respects local culture and practices as well as globally accepted
norms and their spirit.

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Continuing to Support Value Creation

Risk Management

Approach and Policy
The SMM Group engages in risk management (RM) under the following Six Principles established toachieve our long-term vision in becoming the world leader in the non-ferrous metals industry.
1. The organizational leader confronting the risk is the responsible party
2. Compliance is the foundation
3. Recognize that potential risks can materialize and take necessary risk countermeasures
4. Risks recognized as a result of change are shared among all parties involved
5. I mplement RM in daily operations, considering the organization’s hierarchy, size, role, and maturity,
regional and cultural factors, and the knowledge, views, and values of stakeholders
6. Conduct ongoing reviews and improvements of management framework and initiatives

The definition of risk at our Group includes both that which is beneficial to our goals and that which is
detrimental to them. We see risk as something that will have an effect on the achievement of businessand organizational goals and that makes the protection or creation of value uncertain. Through risk
management, we are able to revise goals and measures to maximize those risks which are beneficial, andinspect and improve processes to minimize those risks which are detrimental. This helps us achieve our
3-Year Business Plan, and ties into further ensuring the realization of our Vision for 2030 and our longterm vision.

Business risk

Promotion Structure
in place to respond to risks and changes in the Group’s business environment by promoting and monitoring Group-wide
policies and priority measures.
In addition, the Risk Management Promotion Meeting
serves to promote and monitor the Group’s risk reduction
and operation and improvement of RM.

Business risk management
Operational risk management
Site-specific risk

(risk of undermining the stability of management)

Framework
Sustainability
Committee
President
Risk Management
Working Group
Chair: Executive officer in charge of the
Corporate Planning Department
Deputy Chair: Executive officer in chargeof the Safety & Environment
Control Department
Members

Risk Management Promotion
Committee

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PolicyReport on initiatives

Department in charge(business division, etc.)

Business sites (plants, mines, Group
companies, etc.)

Business Risk Management
Regarding management and business risks associated with
our Group’s growth and business strategies, we have a mechanism to address critical Group-wide risks, deemed particularly important for the achievement of not only initiatives
such as management meetings, various committee meetings,
medium-term plans, budgets, settlements and monthly activities, but also for the achievement of strategic goals (3-yearbusiness plan). The critical Group-wide risks are discussed inmanagement meetings attended by executive officers,
including the president, and deliberated by the Board of
Directors. Response policies are established, and each department’s initiatives are monitored and promoted through the
Risk Management Working Group.

Operational Risk Management
At each business site, in addition to focusing on specific risks
addressed annually, risks inherent in regular operations arealso identified and assessed based on internal and external
conditions, and are managed as individual risks (see tablebelow). There are over 1,400 individual risks, and as a meansof reducing risks daily, when there are any changes to environments and conditions that serve as prerequisites for identified risks (business environments, work environments,
people, equipment, work procedures, quality standards, etc.),
these risks are reviewed and updated, or handled as new
risks. A periodical risk review is also undertaken during the RM
Promotion Campaign every September.
Serious risk categories• Explosions and fires• Environmental pollution• Natural disasters• Legal violations• Quality failure• Occupational accidents• Terrorism / abduction• Pandemics• Supply chain disruptions• Information leaks• Damage from harmful rumors• Violation of intellectual property rights• Other risks include those originating from moral misconduct,such as fraudulent accounting,human rights issues, andmalfeasanceCrisis Management
In preparation for crises beyond assumed scenarios of management and site-risk management, as well as instanceswhere on-site handling is challenging, a standing Crisis
Management Committee chaired by the officer responsible
for crisis management was established. The committee works
toward the sharing of crisis information, the formulation andimprovement of proactive measures, and the maintenanceand strengthening of crisis management functions throughtraining. It also deliberates on initial response to emergencies,
and transition into Group-wide response headquarters whichtakes appropriate actions and provides support based on thelevel of crisis. The president has ultimate responsibility forcrisis management as a whole.
At every business site, we are advancing measures toaddress earthquakes, tsunamis, flooding, soil liquefaction,
landslides, volcanic eruptions, and other natural disasters, inline with the hazard level. We are undertaking seismic reinforcement of buildings, improvement of seawalls, strengthening of wastewater treatment capacity, expansion of water
storage tanks, stockpiling of food and drinks, and enhancement of emergency supplies, among other measures. We also

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Continuing to Support Value Creation

RM will be promoted through the efforts of the president,
who bears ultimate oversight responsibility for RM, and thehead of each business division and business site as the person responsible for RM within their unit.
The Risk Management Working Group, operating under the
Sustainability Committee and is served by the Safety &Environment Control Department as secretariat, has a system

Prior consideration
Prevention measures(risk accompanying growth and business strategy)

Corrective action

Approach

In reflecting on the JCO criticality accident that occurred in
1999, our RM system (RMS) was established with the president bearing ultimate oversight responsibility, focusing
mainly on the prevention of serious accidents at our sites,
and has been effective in preventing industrial accidents andother accidents that have a large societal impact. On theother hand, in response to the changing demands from thebusiness environment and society, as well as increasing complexity and sophistication of risks associated with growth andbusiness strategies, we have repositioned RM from the prevention of major accidents at business sites to the creationand protection of the organization’s value. We have reviewed
and updated Group-wide RMS based on three frameworks(see diagram below). Further, we have established a system
to address the risks and changes surrounding our Groupthrough the Risk Management Working Group, which promotes and monitors Group-wide policies and priority
measures.

Crisismanagement

PolicyReview of Company-wide Risk Management

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Continuing to Support Value Creation

Quality Assurance

Risk Management

conduct training for earthquakes, fires, environmental accidents, and overseas terrorism, riots, and kidnappings, among
other scenarios. In addition, we are working to address issues
such as unfamiliarity with materials and equipment, insuffi-

cient understanding of rules and procedures, andinadequate manuals, and to improve the decision-making
capabilities of local task force members.

Future Initiatives
For FY2023, we will continue with the FY2022 RM policy of“Assess and respond to changes in risks caused by changes
inside and outside the Company,” and based on revisions toGroup-wide RM, will focus on reassessing risks and reviewing
crisis measures, including major Group-wide risks and disasters as priority initiatives.
Revisions to Group-wide RM in FY2022 primarily focusedon system aspects, and in FY2023 we are in the execution
phase of these measures. In doing so, the entire Group willreassess risks and review crisis countermeasures to improveand streamline activities.
Further, events such as Russia’s invasion of Ukraine and the
U.S. Speaker of the House’s visit to Taiwan have escalated tensions between Western countries and China-Russia. In Japan,
we have seen instances of attacks during election campaign
speeches, targeting both former and current prime ministers.
Considering the heightened risks toward national security, we
will focus on enhancing overseas crisis management, withemphasis on preparedness for a Taiwan contingency, andprevention of and response to unlawful detention in China,
etc. With regard to natural disasters, in light of ongoingthreats with earthquakes on the Noto Peninsula in June 2022
and May 2023, with a seismic intensity of under 6 and over 6,
respectively, and the “Damage Estimation in Tokyo resulting
from a Tokyo Inland Earthquake (May 2022)” released by the
Tokyo Metropolitan Government, we will work towardenhancing the Group-wide disaster preparedness measure
based on the diversification of work styles, changes in values
and social norms, and advancements in equipment andmaterials.
In tandem with these efforts, our top management continues to lead activities to prevent issues such as compliancebreaches, environmental accidents, occupational accidents,
and quality issues, to ensure success in new business andprojects, and achievement of business goals.

Approach and Policy
The SMM Group has established and operates a business model based on 3-business collaboration
between the Mineral Resources, Smelting & Refining, and Materials Businesses.
Through this business model, we endeavor to continuously improve products and respond to changing
customer needs in order to deliver quality that satisfies customers.
To provide quality that satisfies customers, the president has established a Company-Wide Quality
Policy and sets SMM Quality Objectives every year. Based on these standards, each business division sets
forth and implements division-specific quality targets and conducts quality activities that are aligned
across the entire SMM Group.
Company-Wide
Quality Policy

Provide quality to satisfy our customers through continual improvements of quality assurance and control systems.
P ursue quality levels that stand out from the trends of the timeA
 bide by laws and rules and strive to create products incorporating safety and environmental
considerations

Quality Assurance Promotion Framework
With the president bearing ultimate oversight responsibility,
we have appointed an executive officer in charge of the
Quality Assurance Department to drive quality assurance initiatives. Each business division develops and maintains theirown quality assurance framework, while the Quality
Assurance Department manages quality across the entire
Group and ensures a Group-wide unified approach.
Additionally, not only does the Quality Assurance Working
Group—which comes under the Sustainability Committee—
deliberate key measures for promoting quality assurance

activities, it works to improve the Group’s quality management
systems (QMS) through the sharing of information on progress
toward departmental targets and quality control status
including the reduction of the number of complaints against
the Company.
In addition, quality assurance managers from the various business divisions and business sites, along with members of thehead office’s Quality Assurance Department hold an annual
quality meeting to share the quality management status of eachbusiness site and quality issues common across the entire Group.

Sustainability
Committee
Functional instructions
Comprehensive management and support

President
Quality Assurance
Working Group
Chair: G eneral Manager of
Quality Assurance
Department
Members

PolicyReport on initiatives

Department in charge(business division, etc.)

Quality Assurance
Department
Quality meeting

Continuing to Support Value Creation

Promotion Structure

Quality assurance managers,
department in charge
Business sites(plants, mines, Group companies, etc.)

Share information

Quality assurance managers,
business site
Business site divisions(departments, sections, etc.)

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Continuing to Support Value Creation

Quality Assurance

Overall picture of QMS and applicable items in SMM Quality Standards

Chapter 1

Quality Complaints
120
Ratio of the number of complaints

The chart to the right illustrates the trend of quality claims
since FY2014 for the entire Group.
Quality complaints declined gradually from FY2014
onwards, and in FY2022, the number of complaints had
reduced to approximately one-third of that of FY2014. We
believe that this is due to the effective implementation ofquality improvement initiatives at each business division andbusiness site, and the impact of QMS.

Leadership and customer focus

Quality complaints (with FY2014 data as 100)

100
80
60
40

2014

2015

2016

2017

2018

2019

2020

2021

2022

Equipment andmeasurement
instruments

Chapter 8

Knowledge,
awareness,and competenceManagementof external
provisions

Chapter 2

Intended resultsof QMS

200(FY)

Chapter 6

Chapter 5

Needs and expectations of stakeholders

Drive QMS improvements to achieve zero major quality complaints and create a structure that earns customer trust.

Z ero major quality complaints. Prevent complaints on quality that could jeopardize our business foundation
Z ero occurrences of quality misconduct
A chieve complaint goals within business divisions

Internal andexternal issues

FY2023 Company-Wide Quality Policy

Corporate Philosophy
Business Strategy

Internal audit and management review

SMM Quality Objectives

Competence andawareness

Resources
Control managers
Input

Process

OutputKey Performance
Indicators (KPIs)

Methods (monitoringand measuring)

Chapter 3

Chapter 4

Chapter 7

Determination ofrequirements

Change management
and initial flow
management

Corrective action
and fraud prevention

Policies andobjectives

Improvements

Quality Improvement Initiatives
Strengthening of Our Internal Quality Audits
Improving Effectiveness of Quality Management Systems

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Based on SMM Quality Standards
Evaluation and revision of
improvement details
Corrections based on
audit results
Corrections basedon assessments ofinitiatives

A

P
Improving
Effectivenessof Quality
Management
Systems

Quality audits by the Quality
Assurance Department
Internal quality audits atbusiness sites

C

Self-assessment
Identify weaknesses and strengthsof one’s own organization

Goal setting
Goal setting to improveon weaknesses
Focus-oriented goal
setting

D

Based on the SMM Quality Standards, we currently aim tocarry out activities to achieve internal quality audits which
work with a third-party-like perspective to identify potential
internal issues from problems that have been found, andrelay these findings to top management. We hold training tocultivate internal quality auditors at business sites in Japan,
turning out roughly 450 internal quality auditors from FY2019
to FY2022. We operate a PDCA cycle to develop these internal

Initiatives towardachieving goals
Executing improvement
measures
Monitoring and assessing
improvements

Evaluation of initiatives at businesssites

Business sites

Quality Assurance Department

Quality management systems

Reports on
audit results

Internal quality auditsP rocess operations, and conformance effectivenessP revention of quality fraud, and data reliability

Quality audits
 QMS mechanisms and effectiveness acrossbusiness sites

Deployment of SMM quality standards
AuditsThe SMM Quality Standards are revised each year to raise
QMS to the level required by the Group so that we can deliver
quality that satisfies customers.

AuditsContinuing to Support Value Creation

The SMM Group has established and operates QMS at its business divisions and business sites. For such QMS to function
effectively, we have been conducting improvement activities
based on the SMM Quality Standards, which constitute a summary of the ideal form of QMS at our Company. Every fiscal
year, each business site sets a target level for the SMM Quality
Standards prior to engaging in improvement activities, and—while assessing these activities through internal quality audits
and quality audits by the Quality Assurance Department—
undertakes self-assessments of its level of quality achieved asof the end of the fiscal year. The effectiveness of QMS at business sites is continually being improved by setting new targets for the next fiscal year based on the results of theseassessments and then conducting improvement activities.
The SMM Quality Standards categorizes requirements into
eight sections, with content based on prior incidents, allowing us to identify strengths and weaknesses of each businesssite, and to focus on improving such weaknesses.

auditors, and confirm their effectiveness through supervised
audits by trained internal auditors.
To prevent quality-related misconduct such as falsification of
inspection or testing data, we provide Group-wide quality fraud
prevention training opportunities using e-learning. In addition,
Group-wide efforts are made to deter misconduct, includinginternal quality audits to guarantee product quality and to confirm the reliability of inspection or testing data, automatedtransfer thereof to avoid human intervention, and if such automation is difficult, administrative measures are enhanced.

PDCA cycle for QMS improvement in SMM Quality Standards

Reports on audit results

Identify, analyze, and manage audit results
ReportingDirectives

Reporting to heads of business divisions and business sites

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Continuing to Support Value Creation

Quality Assurance

Expansion of Group-Wide Education on Quality
We provide training on quality based on our education system that aims to equip each level of employee, from new
employees to managers, with necessary quality-related
knowledge and management ability. With the aim to acquirewide-ranging quality-related knowledge and awareness, SMM
Hinkaku,* an e-learning program for all employees launched
in FY2019, with approximately 5,900 employees taking thecourse in FY2021. SMM Hinkaku will be used for the educationof new employees and transfers.
As a shortage is expected of human resources capable ofassuming responsibility for quality in the future, training is
conducted Group-wide to nurture people responsible for
quality. Four practical training sessions a year are conducted
to improve the effectiveness of the QMS by rolling out SMM
Quality Standards to the business divisions. After completion,
the trainees will determine issues to be addressed at theirown business sites and aim to accomplish these issues by utilizing what they have learned in the training program. The
Quality Assurance Department also follows up on the progress of the initiatives. The training was completed by roughly
25 employees in FY2022 and is currently participated by 20
employees in FY2023.
* Trainees learn the minimum level of knowledge and awareness regarding quality
required for manufacturing and then their proficiency is graded through a test.

Disclosure of Information on Products and Services

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1. SDS (Safety Data Sheet): A document listing information on a chemical, including
the chemical substance, the product name, the supplier, hazards, safety precautions and emergency procedures.
2. We also conduct surveys linked to life cycle assessments (LCA) for copper, nickel,
and zinc through associations related to each metal.

Communication with Customers
Business divisions and business sites take the initiative in conducting customer satisfaction surveys. The results are fed
back to the sales and development divisions. To enhance customer satisfaction, we are constantly improving our methodsof measuring and assessing customer satisfaction, accurately
identify issues through precise and sufficient communication
with our customers, and execute effective measures. Throughquality improvement activities, we contribute to resource andenergy conservation by improving product yield.

Initiatives to Take on Issues and Provide
Improvements
Quality that earns customers’ trust is achieved only when all
employees align their goals and directions and actively
engage in activities to achieve targets. To enable this, we clarify issues based on facts obtained through communication
inside and outside the Group, set targets, and work to achievethese through active participation by all employees in Policy
improvement activities based on our SMM Quality Standards.

Information on SMM Products Requiring Disclosure by Labeling and Applicable Products/Services
Information requiring disclosure

Applicable products/services

The sourcing of components of the product or service

All products/services containing substances requiring management under legislation
Requirement is not applicable to our main products (rawmaterials and internally processed materials)

Content, particularly with regard to substances that might produce environmental
or social harm

All products/services containing substances requiring management under legislation

Safe use of the product or service

All products/services containing substances requiring management under legislation

Environmental/social harm from disposal of the products

All products/services containing substances requiring management under legislation

Methods for Providing Information
Provision of Information Relating to Specifications

Other Initiatives

We indicate product specifications requested by the customer on the order received sheet to provide necessary information to them.

The SMM Group also engages in transactions such as the saleof different types of lubricants to general consumers. In linewith related laws and regulations, we provide information on
products and services in this area through labeling, advertisements, and explanations to ensure correct understanding.

Provision of Information Relating to Chemicals
The SMM Group uses SDS, etc. to provide information on chemical substances contained in products, complying with regulations
for chemical substances and usage, regarding health and safety.

Responding to Product Quality Issues as They Arise
If a quality issue arises in relation to the Group’s products orservices, the necessary action will be taken in accordancewith the Quality assurance regulations. The business divisions
and business sites will immediately check facts, report resultsof root-cause analysis and verification to the customer, andagree on the necessary corrective actions and recurrence
prevention measures.

In the unlikely event that a serious quality issue occurs, thebusiness division will promptly report the problem to management and the General Manager of the Quality Assurance
Department, who in order to resolve quality issues immediately, will check the progress of necessary response measures,and confirm the effectiveness of corrective actions and measures to prevent recurrence.

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Continuing to Support Value Creation

Most items in the SMM Group product lineup are supplied as
raw or processed materials for use by customers for manufacturing. Information that customers require to handle ourGroup’s products properly from safety and environmental
perspectives, as well as information needed to enable themto supply products, is communicated in product specifications at the time of contracting, during technical discussions,and via product inspection certificates and safety data sheets(SDS),1 based on prior and the latest information, our Group’s
proprietary knowledge, and necessary studies. SMM products
supplied to customers are carefully designed, incorporating
considerations toward safety and environmental compatibility, and are only delivered after thorough trials and inspections carried out during their manufacture2. We make surethat information utilized for the above is always appropriate

through management systems, reviewing it based upon thelatest technology, laws and regulations and demands from
customers.

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Continuing to Support Value Creation

Special Feature 3
Human Resources Strategy

Transformation and Tradition– Preservation through Transformation –What SMM Should Preserve and What SMM Should Change

Akiyo Tsuchimoto
HR Consultant

DialogueOur 2021 3-Year Business Plan sets forth the 4
Challenges under the theme of “Renewed Challenge
for Change.” Challenge 3 covers initiatives for securing, fostering, and utilizing human resources. We
asked HR consultant Ms. Akiyo Tsuchimoto and Mr.
Satoru Nishihara, General Manager of SMM’s Human
Resources Department, to discuss what SMM needs
to change and what it needs to preserve in its humanresources strategy in order to achieve long-term
growth.

Nishihara: In securing human resources, we place the greatest emphasis on whether or not they can respond tochanges. The decrease in the working population due to falling birthrates and an aging population is becoming such thatcompanies cannot sustain their organizational structures. We
hope our employees share this sense of crisis and recognizethat maintaining the status quo is tantamount to regression.
Tsuchimoto: Since it is human resources that executes strategies, considering the capabilities and requirements forhuman resources is the starting point for everything in management. However, the biggest problem currently is the lackof human resources in the labor market as a whole, and if
companies do not actively take the initiative to secure humanresources, they will lose out to the competition. The key point
is not only how to acquire human resources, but also how todevelop them. This is the bottleneck, and I believe that SMM
is implementing its human resources strategy with a verystrong sense of urgency.

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General Manager of Human
Resources Department

Inheriting the values that should be preserved by
SMM
Nishihara: We provide opportunities for our employees tovisit the Besshi Copper Mine to learn about the Sumitomo
Business Spirit. In 1999, one of our subsidiaries had a major
accident that caused a great fallout in society. Since then, we
have been more conscious of having each and every
employee return to the origin of the Sumitomo BusinessSpirit and understand what is most important to the Group.
This mountaineering training is not only conducted by
SMM, but also by many SMM Group companies as part oftheir corporate training programs. The climbing route isapproximately 3.2 kilometers (2 miles) and takes 2.5 hours
each way, making it a relatively easy trek. Before the accident,
tens of thousands of people engaged in mining lived here. By
walking around the mine entrance, refinery, theater, andschool sites, visitors are reminded of the hardships of bygone
days and learn what is important in the present moment andwhat must be done to ensure the development and continuation of the business.
Tsuchimoto: The history of SMM is one of the longest of any
Japanese company. It is truly a company that helped build
the industrial foundation of Japan. The COVID-19 pandemic
has made many people realize the power of the tangible reality, and I believe the impact of actually seeing the remains
and hearing the stories at the site is immeasurable. The training at the Besshi Copper Mine must be bringing about a significant change in employees’ mindsets.
Nishihara: One of our employees who actually visited themine said, “I now feel as if I am at a transit point in the
Company’s 430-odd years of history.” Climbing the mountainand coming into contact with the traces of the site seems tobring about a realization that we are now entrusted with abaton from our predecessors and that we must pass it on to
the next generation.

To secure and foster necessary human resources
Nishihara: Securing human resources is becoming more andmore difficult with each passing year. In addition to theshrinking working population, the number of university
departments in the resources and smelting and refining fields,
which are the foundation of our industry’s technology, is also
decreasing. Since there is also a shortage of workers pursuinga career in the resources and smelting and refining fields, wehave a policy of solidly training new graduates as soon as they
are hired, and offer a Smelting & Refining University course totrain smelting and refining engineers. In addition, we haveestablished scholarship programs and have begun to focus
on recruitment by job type by increasing our efforts toapproach various universities to secure human resources, visiting university employment offices to ask the students themselves about their assignment preferences. At the same time,
we have begun to look for ways to recruit key personnel fromour overseas business sites. At present, we are planning to hire
50 to 60 new graduates and about 70 mid-career employees.
Tsuchimoto: The abilities required for the corporate field are
relatively versatile, so acquiring personnel from the external
labor market is a rational decision. The addition of outsiders
will have a revitalizing effect with a high probability of changing the corporate culture. There may be things you havealways been doing a certain way over the long history of theCompany without question, on which personnel comingfrom the outside can give constructive criticism. Such conflicts should be welcomed, and I hope that you recognize alow turnover rate is not necessarily a benefit.
Nishihara: I also believe that conflicts are essential. We must
not shirk from conflicts in fear, and we must value free andvigorous discussion. As our customers and stakeholders are
becoming more diverse, we also need to become more flexible in response.
The revision of the personnel system for managerial track
employees introduced a system based on job grade, making
it easier to accept mid-career personnel by improving theconsistency between duties and responsibilities and compensation. We are also reviewing our human resources development program, and have begun to prepare the necessary
educational tools, such as online learning tools, so that
employees can proactively enhance their own skills and abilities required for their next position, whereas training used to
be provided after promotion. At the same time, as in the past,
we will continue to select candidates for the next generationof management and provide them with a solid education on
the Sumitomo Business Spirit. In addition, while the main
focus of training has been for supervisors and instructors totrain young workers through practice in OJT, which is to learn
to perform existing tasks in the conventional way, we will
instead encourage acquiring the abilities and skills to solve
new problems and respond to new changes in theenvironment.

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Continuing to Support Value Creation

Taking action to secure human resources as theworkforce continues to shrink

Satoru Nishihara

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Continuing to Support Value Creation

Special Feature 3
Human Resources Strategy

Transformation and Tradition– Preservation through Transformation –What SMM Should Preserve and What SMM Should Change

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What value will be created by the new personnel
system?
Tsuchimoto: In recent years, all kinds of companies havebeen conducting engagement surveys. Looking at the resultsby age group, the higher the age group, the higher the levelof engagement at all companies. This is not surprising whenviewed as a reflection of Japan’s seniority-based compensation system.
Nishihara: Employees, especially young people, have thedesire to experience growth at an earlier stage and to achieve
the career they desire. In order to meet these expectations,the new system will incorporate an internal open recruitment
system. However, we will also emphasize the substance of
the work.
Tsuchimoto: In recent years, job-based employment has also
gained a lot of attention. This is where one chooses a university, gets a job, and becomes a professional in that role, but Iquestion whether all people are truly happy working down
the same career path for the rest of their lives. With traditional
recruitment, you can explore your career until you are in yourmid-30s, and if you feel that you have found the right careerfor yourself, you can pursue it more deeply while assessing
your aptitude. There may be a rational side to it after all.
Since people hone their abilities best through their work, I
think it is necessary to challenge young people more andmore and to let them make their own proposals. And this, inmy opinion, is related to the open and vibrant organizational

What does"Open and vibrantorganizational climate"
mean?

Ｑ

Framework of a "Open and vibrant organizational climate"

Freedom enabling all menbers to express theirthoughts and observations regardless of theirposition within the organizational hierarchy
An atmosphere that welcomes new ideas
and new challenges
A structure in which judgements are basedon what is right, and not on who is right
The foregoing are predicated on the common sharing oforganizational policies, targets, rules and regulations

Our targeted open and vibrant organization =An organization having the above mentioned
elements

climate that your Company has set forth.
Nishihara: It is important to figure out how to align the trajectory of the individual’s growth with that of the Company.
By changing the personnel system, we will support andreview the development program so that if you work hard,
you will have opportunities to get the job you want as soon
as possible.
By creating an open and vibrant workplace, we place highvalue on teamwork, in the form of cooperation both withother organizations and with fellow employees, and aim tocreate a system that facilitates the smooth transfer of required
information.
Tsuchimoto: Top performers also excel in how they streamline the work they are given. One company in GAFA, an IT
megacorporation in the U.S., devotes 20% of its time to innovation, and this is after completing 100% of the work in 80%of the time. The better you are, the more you think about
how to make 80% of your working time more efficient.
Nishihara: I would like to create the conditions whereby
good job opportunities are given early on so that talented
employees can take a vibrant and active part. One would
think that joining a company indicates a desire to leave some
sort of imprint on it that will connect with the next generation of that company. The greatest management resource ispeople. I would like to make the most of the power of humanresources who have this passion and are willing to take on
various challenges.

Human resources strategy to fulfill management
strategies
Tsuchimoto: Recently, there is a lot of talk about talentmanagement. Until now, human resources departments, as
human resources professionals, determined and provided allmeasures, but now the trend is to change this to a form thatallows each field to act on its own initiative. To this end, it isnecessary to have a system of openly disclosing personnel
information, and it is important that managers in the fieldunderstand the purpose of such a system.
Nishihara: The SMM Group is also planning to introduce talent management. In particular, managers will be asked toconsider which skills to have their subordinates hone andwhat tough experiences to put them through for their
growth and future utilization. They will also be asked to clarify
which experiences and skills are best suited for each job andpost, and to pool people for the next executive candidates. I
believe that it is our job to provide the mechanisms to makethis possible.

Satoru Nishihara,

Akiyo Tsuchimoto

Human Resources Department
General Manager

Institution for a Global Society
Corporation
Executive Officer, HR Division

Mr. Satoru Nishihara joined theCompany in 1991. After serving as
the General Manager of theSecretarial Department and theGeneral Manager of the Human
Resources Development., hehas been in his current position since February 2023.

(at the time of the interview in May 2023)
Ms. Akiyo Tsuchimoto joined a general electronics manufacturer as a
new graduate from Tokyo Universityof Foreign Studies with a Bachelor ofArts degree in Foreign Languages.
After working for an HR consulting
company, she joined Institution for a
Global Society Corporation in 2019.
She is in charge of many projects to
support the promotion of DX in
major Japanese companies from the
aspect of people and organization.
She is also a lecturer of Introduction
to Human Resources Management
and Introduction to Human CapitalManagement at TUS Open College.
She holds a master’s degree in management of technology.

Continuing to Support Value Creation

Tsuchimoto: Recruitment of mid-career personnel has
become a social issue for Japan as a whole. I believe that weshould make greater use of the power of women in the realmof mid-career recruitment. Japan has some of the world’s
best-educated women. There are many women who have left
the workforce to raise children, but who want to return. I
think it would be a good idea for companies to proactively
start taking advantage of this kind of talent.
Nishihara: I also feel that women can excel in the hiring
arena. However, due to the nature of our mining business, wewere legally prohibited from hiring women as mine workers.
The law was only amended in 2007. I also believe that the factthat the smelting and refining industry is centered on hotweather work and shift work may be one of the reasons why
we have tended to lag behind in the promotion of women.
However, it is necessary to discuss how to secure and makeuse of female human resources at a higher level.
Tsuchimoto: It has also been pointed out that women areless motivated for promotion than men. However, in somecases, this is due to the lack of role models, which makewomen assume that they are not qualified for leadership
positions. In addition, people have a similarity bias, that is, atendency to prefer people with similar abilities to themselves.
Sometimes a male supervisor may subconsciously value amale subordinate who is good at logical thinking and emotional control, for example, because he has similar abilities
and characteristics as himself.
Nishihara: In June 2023, we welcomed our youngest andfirst female executive officer under our new structure. I know
the role of a leader will be challenging, but I see it as a big
step forward that will lead to the next stage of the Company’s
development.
Tsuchimoto: Since the Equal Employment Act was revised in
1997, both men and women have become much more egalitarian about sex-based division of labor. Companies have notbeen able to take advantage of this change in awareness,
which is another issue.
Nishihara: I also believe that the physical differences
between men and women in terms of physical strength canbe accommodated materially, otherwise I think that men andwomen are completely the same.
Tsuchimoto: SMM’s information disclosure regarding humanresources shows the hours of training taken by class, by age
group, and by sex, which shows that male regular employees
have the highest number of hours of training. Also, it is said
that investment in executives has a good return on investment, and when we actually see the figures, we can discuss
whether this is really the optimal level for the Company’s
growth. I think this disclosure is excellent and should definitely be benchmarked.

Poster for executives and employees to promote an open and vibrantorganizational climate

SUMITOMO METAL MINING CO., LTD.

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131

Continuing to Support Value Creation

Special Feature 3
Human Resources Strategy

Transformation and Tradition– Preservation through Transformation

What SMM Should Preserve and What SMM Should Change

Initiatives for Transformation and Tradition
Through our human resource development policies and measures, we introduce our values of transformationand tradition and measures in response to the social environment. These are connected to our value creation.

The Shikinen Kaikaku Project (The Fixed Period Reform Project)

Corporate advertising with a focus on TV commercials

Creating regular opportunities for and instilling reforms in the culture

Corporate branding for securing human capital

The Shikinen Kaikaku Project involves the fixed period, mandatory application of a scrap and build process (inspired by theWith the aim of securing human capital and increasing corporate recognition, a new advertising campaign focused on TV commer-

Shikinen Sengu* ritual) to the Group’s core technologies, programs, and operational systems with the following aims: (1)cials was released in October 2022 to promote our brand.

Swiftly and voraciously identifying and absorbing social and environmental changes, technological trends, and other movement in society and reflecting these in the Group’s management (transformation), (2) regularly reviewing and exploring

Transformation

existing technologies, programs, and systems in-depth to gain a fundamental understanding so the Group’s technology andWith a history of more than 430 years, the SMM Group has overcome various difficulties and continued its business by looking toculture can be passed down to future generations (tradition), and (3) providing a venue for the focused development of

the future and continuing to transform itself in accordance with the changing times. “Our history continues” expresses the continuity

human resources (education). We began the project in October 2020, and appoint future leadership candidates as project

and future orientation of SMM.

leaders to provide them with practical experience on various themes which they cannot gain through off-the-job training.
We believe this will lead to even greater growth.
* Shikinen Sengu: A ritual held about every 20 years at Ise Jingu Shrine and other shrines in which the divine palace and its sacred apparel, furnishings, anddivine treasures are completely remade and the enshrined deity is moved to the new sanctuary.

We will continue to develop this advertisement as a message that not only provides branding to our stakeholders who are potential recruits, but also motivates our employees and makes them want to continue working for SMM.

Recognized as a 2023 Health & Productivity Management Outstanding Organization

New employee dormitory in the Besshi District completed

Initiatives to ensure that employees and officers are physically and mentally healthy and exercise their abilities tothe fullest

Toward securing young human capital and improving employee productivity and creativity

The SMM Group promotes initiatives to maintain and improve the health of each and every employee. In August 2022, we estab-

The new employee dormitory, which we had been constructing in the Besshi District (Niihama City, Ehime Prefecture), waslished the SMM Group Health & Productivity Management Policy, and in September of the same year, the SMM Group Health &completed in September 2022. The dormitory, the largest of its kind in the Group, is designed for unmarried employees andProductivity Management Promotion Regulations were established, forming a promotion system and roadmap. We recognize that an

those assigned to work alone, and includes a guest room for the use of the residents’ families and a private wheelchair-acces-

important management foundation is the ability of our employees and officers to be physically and mentally healthy, and to exercise

sible room.

their abilities to the fullest. In March 2023, SMM was recognized as one of the 2023 Health & Productivity Management Outstanding

Based on the concept of a space that improves productivity and creativity and leads to employee growth, this new dormi-

Organizations (large enterprise category) under the Certified Health & Productivity Management Outstanding Organizations

tory will achieve both the satisfaction of private space and the encouragement of communication among residents in the

Recognition Program* selected by the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi.

common areas. By increasing the points of contact between residents, we aim to create growth opportunities for dorm resi-

We will continue to implement and enhance more effective measures to maintain and improve thedents by encouraging interactions that transcend departmental affiliations, and promoting both information exchange

physical and mental health of our employees and officers so that they can work with greater healthamong employees and the building of personal networks. Along with helping house a significant increase in the number ofand vigor.

recruits in the Besshi District, it will also help to recruit talented young people from outside the area.

* Certified Health & Productivity Management Outstanding Organizations Recognition Program: This program recognizes corporations, including large enterprises and small and medium-sized companies, that practice particularly excellent health and productivity management based on their promotion of health as set forth by the Nippon Kenko Kaigi and efforts to address local
health issues.

Smelting & Refining University

Mining School

Training aimed at developing problem-solving skills by linking theory to manufacturing on-site

OJT training to acquire specialized and general skills for mining operations at sites in Japan

Since 2017, the SMM Group has been providing the Smelting & Refining University in order to promote the development of

The continuation of mine operations requires the training of engineers with advanced expertise and experience and the passing on

human resources in the metals field. There are increasingly fewer opportunities to learn the theories behind manufacturing inof skills. The SMM Group is using the Hishikari Mine as the site for our Mining School to train mining engineers, with the aim of pass-smelting and refining within non-ferrous metals-related education at universities and other institutions. In addition, the number ofing on advanced technical skills.

Continuing to Support Value Creation

Tradition

With the catchphrase “Our history continues,” the new ads feature Toma Ikuta, who has had a long career as an actor and continues
to be active at the forefront of the industry, as the face of the brand.

new employees in our metals divisions who are not majoring in materials science is increasing, and there is a growing need to pro-In the Mineral Resources Division, new recruits in the mining and geology fields are assigned to the Hishikari Mine, while newvide them with opportunities to learn specialized knowledge after they join the Company. The Smelting & Refining University is

recruits in the mineral processing field are assigned to the Niihama Research Laboratories, where they learn the basics of specialized

mainly for employees involved in metals in their second year with the Company. After being assigned to a job and working on-site,

technologies and general mining operation techniques through OJT training. After gaining experience in the Mining School, they are

they will again learn in an Off-JT setting, with the aim of linking theory to manufacturing on-site and acquiring problem-solving

dispatched to overseas mines for local development and operations, or to the Head Office for project management and other duties,

skills. Researchers from SMM research laboratories and section managers from each plant serve as lecturers, and participants

becoming engineers who are active at our sites around the world. In the future, we will enhance the experience of each employee

acquire specialized knowledge and learn how to approach problems as a smelting and refining engineer. We will continue tothrough aggressive overseas field surveys in order to acquire new superior projects.

focus on training the smelting and refining engineers who will take over the skills and technologies developed by the Group.

132

SUMITOMO METAL MINING CO., LTD.

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Continuing to Support Value Creation

Directors and Audit & Supervisory Board Members (As of June 24, 2023)

Audit & Supervisory Board Members

Directors

Yoshiaki Nakazato
Chairman and Director

Born: 1953
Apr. 1976 Joined the Company
Jun. 2005	Executive Officer
Jun. 2006	Director
Jun. 2008	Managing Executive Officer
General Manager of Advanced Materials
Div.
Oct. 2008	General Manager of Semiconductor
Materials Div.
Jun. 2009	Executive Officer
General Manager of Advanced Materials
Div.
Jun. 2010	Managing Executive Officer
Jun. 2012	Representative Director
Senior Managing Executive Officer
Jun. 2013	President and Representative Director
Jun. 2018	Chairman and Representative Director
Jun. 2022	Chairman and Director (Present Position)

Number of shares of the Company
owned1: 30,500

Toru Higo
Representative Director
Senior Managing Executive Officer

Born: 1961
Apr. 1986	Joined the Company
Jul. 2010	General Manager of Nickel Sales & Raw
Materials Dept., Non-Ferrous Metals Div.
Jul. 2014	General Manager of Copper & Precious
Metals Raw Materials Dept., Non-Ferrous
Metals Div.
Jun. 2017	Sumitomo Metal Mining Philippine
Holdings Corporation, Director andPresident
Jun. 2019	Executive Officer Senior Deputy General
Manager of Non-Ferrous Metals Div.
Jun. 2020	Director of the Company
		General Manager of Corporate Planning
Dept.
Jun. 2021	Managing Executive Officer
Jun. 2022	Representative Director (Present Position)
		Senior Managing Executive Officer(Present Position)

Number of shares of the Company
owned1: 6,600

Born: 1960
Apr. 1984	Joined the Company
Jun. 2013	Executive Officer
Senior Deputy General Manager of NonFerrous Metals Div.
Jun. 2014	Director
General Manager of Corporate Planning
Dept.
Jun. 2015	General Manager of Non-Ferrous Metals
Div.
Jun. 2016	Managing Executive Officer
Jun. 2018	President and Representative Director(Present Position)

Akira Nozaki

Koji Imai

Tsuyoshi Nozawa

President and Representative
Director

Senior Audit & Supervisory Board
Member (Standing)

Audit & Supervisory Board
Member (Standing)Number of shares of the Company
owned1: 21,300

Number of shares of the Company
owned1: 1,300

Number of shares of the Company
owned1: 700

Born: 1963
Apr. 1987	Joined the Company
Apr. 2008	General Manager of Niihama Nickel
		Refinery, Non-Ferrous Metals Div.
Jun. 2014	General Manager of Administration Dept.,
Non-Ferrous Metals Div.
Jun. 2016	Executive Officer
Senior Deputy General Manager of NonFerrous Metals Div.
Jun. 2018	General Manager of Non-Ferrous Metals
Div.
Jun. 2019	Director (Present Position)
Jun. 2020	Managing Executive Officer
Jun. 2022	Senior Managing Executive Officer(Present Position)

Nobuhiro Matsumoto

Born: 1956
Apr. 1986	Registered as a lawyer
		Joined Ryoichi Wada Law Firm
Mar. 1992	Established Ohta & Ishii Law Firm
Jun. 2018	Director of the Company (Present Position)

Masaru Takebayashi

Taeko Ishii

Director,
Managing Executive Officer,
General Manager of Non-Ferrous
Metals Div.

Outside Director

Executive Officers

Number of shares of the Company
owned1: 0

Number of shares of the Company
owned1: 2,700

Manabu Kinoshita

134

Kanji Nishiura

Outside Director

Outside Director

Number of shares of the Company
owned1: 0

Number of shares of the Company
owned1: 500

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Born: 1958
Apr. 1980	Joined Mitsubishi Corporation
Apr. 2009	General Manager, Metals Group CEO
Office of Mitsubishi Corporation
Apr. 2010	Senior Vice President of Mitsubishi
Corporation
Apr. 2011	Division COO, Non-Ferrous Metals Divisionof Mitsubishi Corporation
Apr. 2013	Division COO, Mineral Resources
Investment Div. 1 of Mitsubishi
Corporation
Apr. 2014	Division COO, Mineral Resources
Investment Div. of Mitsubishi Corporation
Apr. 2015	Executive Vice President, Group COO,
Metals Group of Mitsubishi Corporation
Apr. 2016	Group CEO, Metals Group of Mitsubishi
Corporation
Apr. 2018	Corporate Functional Officer (responsible
for Global Strategy & Coordination, Global
Research, International Economic
Cooperation, Logistics Management) of
Mitsubishi Corporation
Jun. 2018	Representative Director of Mitsubishi
Corporation
Apr. 2019	Corporate Functional Officer (Global
strategy) of Mitsubishi Corporation
Apr. 2020	Director of Mitsubishi Corporation
Jun. 2020	Corporate Advisor of Mitsubishi
Corporation
Mar. 2021	Retired as Corporate Advisor of Mitsubishi
Corporation
Apr. 2021	Representative Director and Deputy
President of Mitsubishi HC Capital Inc.
(Present Position)
Jun. 2023	Director of the Company (Present Position)

Shoji Wakamatsu

Born: 1953
Sep. 1983	Joined Ota Tetsuzo Audit Firm (current
Ernst & Young ShinNihon LLC)
Mar. 1987	Registered as a certified public accountant
Jul. 2003	Partner of ShinNihon Audit Firm (current
Ernst & Young ShinNihon LLC)
May 2006	Board Member of ShinNihon Audit Firm
Aug. 2008	Managing Partner of ShinNihon LLC(current Ernst & Young ShinNihon LLC)
Aug. 2010	Senior Partner of ShinNihon LLC
Jun. 2016	Left ShinNihon LLC
		Established Wakamatsu Certified Public
Accountant Firm
Sep. 2019	Registered as a certified public tax
accountant
Jun. 2021	Audit & Supervisory Board Member of theCompany (Present Position)

Outside Audit & Supervisory Board
MemberNumber of shares of the Company
owned1: 0

1. The number of shares of the Company owned is as of May 31, 2023.

* An asterisk indicates the officer is also serving concurrently as a director

President

Senior Managing Executive Officer

Managing Executive Officers* Akira Nozaki* Toru Higo
* Nobuhiro Matsumoto

Takahiro Kanayama
Hiroshi Yoshida

General Manager of Corporate
Planning Dept.
In charge of Human Resources
Dept., Legal Dept., Digital
Transformation Dept., Internal
Audit Dept. and Osaka Branch

Executive Officers

Eiichi Fukuda

General Manager of Mineral
Resources Div.

Hideyuki Okamoto

General Manager of Technology
Div.

Kazuhiko Hotani

Hitofumi Okubo

Senior Deputy General Manager
of Mineral Resources Div.

Koji Sakamoto

Senior Deputy General Manager
of Technology Div.

General Manager of Engineering
Div.
General Manager of Safety &Environment Control Dept.
In charge of Quality Assurance
Dept.

Shuichi Ogasawara

General Manager of Advanced
Materials Div.

Katsuya Tanaka

General Manager of Battery
Materials Div.

* Masaru Takebayashi
General Manager of NonFerrous Metals Div.

Kunihiko Miyamoto

General Manager of Finance &Accounting Dept.
In charge of Secretarial Dept.,
Purchasing Dept. andInformation Systems Dept.

Toru Motoki

Yasumasa Hattori

Senior Deputy General Manager
of Non-Ferrous Metals Div.

Yoshihiro Sagawa

Senior Deputy General Manager
of Mineral Resources Div.

Mihoko Yano

General Manager of
Sustainability Dept.
In charge of General Affairs
Dept. and Public Relations &Investor Relations Dept.

Continuing to Support Value Creation

Born:1966
Apr. 1990	Joined the Company
Jun. 2016	General Manager of Harima Refinery, NonFerrous Metals Div.
Jul. 2017	General Manager of Toyo Smelter &Refinery, Non-Ferrous Metals Div.
Jun. 2020	Executive Officer
Jan. 2021	Senior Deputy General Manager of NonFerrous Metals Div.
Jun. 2023	Director (Present Position)
		Managing Executive Officer (Present
Position)		General Manager of Non-Ferrous Metals
Div. (Present Position)

Born: 1952
Apr. 1975	Joined Export-Import Bank of Japan
Apr. 2001	Director of Corporate Finance Department
of Japan Bank for International
Cooperation (JBIC) (which was formed as aresult of integration between the former
Export-Import Bank of Japan and theformer Overseas Economic Cooperation
Fund)
Nov. 2002	Director of Personnel Department of JBIC
Oct. 2004	Executive Officer for Asia and PacificRegion of JBIC
Apr. 2007	Senior Executive Director of JBIC
Sep. 2008	Resigned from Senior Executive Director of
JBIC
Feb. 2009	Corporate Advisor of Marubeni
Corporation
Feb. 2016	Resigned from Corporate Advisor of
Outside Audit & Supervisory Board
Marubeni Corporation
MemberMar. 2016	Corporate Advisor of NIPPON STEELCORPORATION (which was NIPPON STEEL
Number of shares of the Company& SUMITOMO METAL CORPORATION)
owned1: 0
		President and Representative Director of
Nippon Usiminas Co., Ltd.
Dec. 2019	Resigned from Corporate Advisor of
NIPPON STEEL CORPORATION		Resigned from President andRepresentative Director of Nippon
Usiminas Co., Ltd.
Jun. 2020	Audit & Supervisory Board Member of theCompany (Present Position)

Wataru Yoshida

Director
Senior Managing Executive Officer
Number of shares of the Company
owned1: 6,900

Born: 1954
Apr. 1978	Joined NEC Corporation
Apr. 2006	Executive General Manager,		Distribution and Service Industries
Solutions Operations Unit of NEC
Corporation
Apr. 2008	Associate Senior Vice President of NEC
Corporation
Apr. 2010	Senior Vice President of NEC Corporation
Jun. 2010	Director of NEC Corporation
Apr. 2016	Senior Executive Vice President of NEC
Corporation
Apr. 2018	Senior Officer of NEC Corporation
Jun. 2020	Director of the Company (Present Position)
Jun. 2021	Retired as Senior Officer of NEC
Corporation

Born: 1964
Apr. 1988	Joined the Company
Jul. 2015	Public Relations & Investor Relations Dept.
Apr. 2018	Finance & Accounting Dept.
Jun. 2022	Audit & Supervisory Board Member(Standing) (Present Position)

Born: 1962
Apr. 1986	Joined the Company
Jun. 2014	General Manager of Legal & General Affairs
Dept.
Apr. 2019	General Manager of General Affairs Dept.
		General Manager of Legal Dept.
Jun. 2021	Audit & Supervisory Board Member(Standing)Jun. 2022	Senior Audit & Supervisory Board Member(Standing) (Present Position)

Shinichi Sato

Senior Deputy General Manager
of Advanced Materials Div.

Munekazu Kawata

Senior Deputy General Manager
of Battery Materials Div.

Yusuke Niwa

Senior Deputy General Manager
of Non-Ferrous Metals Div.

Kazuaki Sakamoto

Senior Deputy General Manager
of Engineering Div.

Hirohiko Matsushita

General Manager of BesshiNiihama District Div.

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Data Section

FAQ
We would like to address questions frequently asked by individual investors and other stakeholders.

1

I have heard that non-ferrous metals havea promising future. Why is this and what
are their growth areas?

Non-ferrous metals such as copper and nickel are importantmaterials that support social infrastructure, and their use continues to increase steadily along with the growth of the
global economy. In addition, the rapid digitalization of society
in recent years, the technological innovation, and energy
transition toward creating a decarbonized society are major
trends that are greatly expanding opportunities for nonferrous metals.
Take the electrification of automobiles, for example. Electricvehicles are said to use about four times as much copper as
conventional gasoline-powered vehicles, and demand fornickel is expected to increase for use as a cathode material inautomobile batteries.

not increase mining and production
2 Whywhen metal prices are high?
Some mines contain dense (high-grade) metals and somelight (low-grade) metals. If only the high-grade areas aremined when metal prices are high, short-term performance
will improve, but the low-grade areas will remain. As a result,
there is a risk of leaving some areas unprofitable, depending
on metal prices. We believe that rather than pursuing only ashort-term contribution to business performance, we should
give full consideration to environmental concerns and local
communities, emphasize sustainable development, and strive
for long-term stable operations, which will lead to the maximization of benefits for SMM and our stakeholders.

3

Why is production at the Hishikari Minebeing reduced in the 2021 3-YearBusiness Plan?

136

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Integrated Report 2023

In July 2021, we announced a 2,000 tons per month production increase for nickel-based cathode material, including theconstruction of a new plant in Niihama, aiming for a production capacity of 7,000 tons/month by FY2025.
In this expansion project, the plan is to complete construction of the new plant by the end of 2023, after which the equipment will be delivered to the plant. Progress of the new plant ison track toward completion in 2025. We will continue to aggressively expand our production capacity to reach 10,000 tons/
month by FY2027 and 15,000 tons/month by FY2030.
In addition, since taking over the lithium iron phosphate(LFP) battery materials business of Sumitomo Osaka Cement
Co., Ltd. in 2022, we have strived for stable production andsales toward its customers, as well as considered converting
our existing process to reduce cost. We will also meet a wider
range of customer needs by expanding our product lineup as
well as our existing nickel-based cathode materials.

5

What are the strengths of the Sumitomo
Metal Mining Group’s 3-business collaboration model?

In its more than 430 years of handling metals, the SMM Grouphas continued to hone not only its mining, smelting, and refining
technologies, but also its analysis, quality and equipment management, research & development, and other technologies. Thisknowledge and these technologies related to metals are used in
the three businesses of Mineral Resources, Smelting & Refining,and Materials, and the combined efforts of these businesses contribute to the expansion of our earnings. A typical example of thecollaboration among these three businesses is our proprietary,
integrated nickel supply chain that spans the securing of nickel
ore to the production of battery materials, and achieves traceability in the securing of raw materials, stable supply, quality, andother factors. Further, we are contributing to the creation of a sustainable, circular economy and expanding business opportunities
by promoting battery recycling, in which nickel and cobalt arerecovered from used secondary batteries for automotive applications in the Smelting & Refining Business and recycled as cathodematerials for batteries in the Materials Business. Another strengthof ours is the supply and demand outlook for non-ferrous metal
resources in areas close to final consumer goods, obtained from
customers for our battery materials and advanced materials. Thisis an important source of information for our medium- to longterm growth investments in the resource field and the smelting
and refining field. Our Group seeks to achieve further growth bycombining the knowledge gained from our three businesses,
including technologies in wide-ranging fields, experience andachievements in numerous projects, and market forecasting.

Why did you start disclosing profit/loss,

6 excluding temporary factors, in FY2022?
Prices of non-ferrous metals (such as copper and nickel) in
which we operate are determined in trading markets represented by LME, and our profit and loss is characterized by thefact that they are significantly influenced by the market environment, including economic trends. Further, when prices of
non-ferrous metals rise, the differences in timing of buying
and selling causes profit to temporarily exceed standard levels, and likewise when prices decline profit temporarily fall
below standard levels. We have received requests from investors to disclose our profit and loss based on actual performance, excluding temporary factors, and as such shared ouractual profit and loss for FY2022 at our Progress of Business
Strategy briefing. For details on what constitutes profit/loss,
excluding temporary factors, please refer to p. 43.

7

What are your shareholder return policies
on topics such as share buybacks anddividends?

Our current financial situation is characterized by a highdemand for funds due to two major projects underway in the
Mineral Resources segment, and the expansion of production
for cathode materials for automobile batteries in the Materials
segment. Further, in terms of the business environment,
development in the Mineral Resources, and Smelting &Refining is becoming increasingly challenging due to factorsthat include the high altitude of sites, the necessity to mine
deeper, and the rising cost of materials. While growth investment requires immediate expenditures in the ¥100 billion
range, it takes time for the results to materialize. Without arobust financial foundation that can withstand these challenges, we cannot position ourselves as a suitable partner for
development projects undertaken by major overseas nonferrous companies.
Considering these factors, we believe it is crucial for us tomaintain a strong financial foundation while steadily executing our growth strategy to achieve our long-term vision.
Therefore, while we do not rule out the possibility of purchasing our own shares in the future, for the time being, we arecommitted to maintaining a performance-based dividend
policy (consolidated dividend payout ratio of 35% or more inprinciple).

are the future prospects for battery
8 Whatrecycling?
We and Kanto Denka Kogyo Co., Ltd. have jointly developed aworld-first horizontal recycling process that recovers lithiumfrom used lithium-ion batteries (LIBs) as a high-purity compound for battery materials. We will continue our efforts toachieve “battery to battery” recycling and contribute to theformation of a sustainable, circular economy and to address
global resource depletion through the promotion of resource
recycling. For details, please refer to p. 77.

9What types of products contribute to a
low-carbon society and to the reductionof GHG emissions?

Examples include battery materials and the near-infraredabsorbing material CWO®. One type of battery materials that
supports electrification in the automotive industry, such as
hybrid and electric vehicles, is cathode materials. Cathodematerials are materials used for the positive electrodes of batteries, and SMM mainly produces cathode materials for batteries used in automobiles. While cathode materials with highnickel content, which are our main products, have highcapacity, it is difficult to ensure stable quality. We maintain ahigh market share worldwide thanks to our technical capabilities and quality control system that enable us to mass produce such cathode materials with stable quality. The
near-infrared absorbing material CWO® is a material thatcombines high transmittance of visible light with strong
absorption capacity of near-infrared rays. When applied towindow materials, for example, it can efficiently block out theenergy of near-infrared rays contained in sunlight, thereby
significantly suppressing the rise in indoor temperatures
while maintaining brightness.

is your approach to business and
10 Whathuman rights?
Based on the Sumitomo Metal Mining Group Policy on
Human Rights, which is in line with the UN’s Guiding
Principles on Business and Human Rights, SMM conducts due
diligence and operates a grievance mechanism that external
stakeholders can also use. In practice, SMM places particularemphasis on the three areas of employees, local residents
and indigenous peoples, and the supply chain, based on thematerial issues of our Vision 2030, namely: Employees’
Occupational Health and Safety, Diverse Human Resources,
Development and Participation of Human Resources,
Co-Existence and Mutual Prosperity with Local Communities,
Rights of Indigenous Peoples, Human Rights in the Supply
Chain, etc. We also promote comprehensive initiatives basedon dialogue and consultation with relevant stakeholders.
These initiatives are regularly reported to the Sustainability
Committee, which is overseen by the Board of Directors andchaired by the President.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Data Section

The Hishikari Mine is a gold mine that boasts high earning
capacity and cost competitiveness, with the most significant
feature being its world-class ore grade (approximately 20
grams per ton), and has produced approximately 264 tons ofgold (as of March 31, 2023) since mining began in 1985. Our
mission at this mine is to completely mine out the 155 tons ofrecoverable reserves as of December 31, 2022. In the 2021
3-Year Business Plan, we have shifted to a sustainability-oriented operation based on average-grade ore mining. In order
to extend the mine life, we plan to produce 4 tons in FY2023,
down from the 6 tons before the 2021 3-Year Business Plan.
We will continue to work on the development of the lower
orebody of the mine and will also review our cost structure
through a variety of innovative means, such as DX.

4

What are your plans for increasing production of battery materials needed for xEV,
which are expected to grow in the future?

137

Data Section

Glossary

Term

Explanation
A raw material used in copper smelting, consisting of about 30% copper content with sulfur and iron as most of the remainder. Copper
concentrates are produced mainly from sulfide ores. At present, ores
extracted from overseas mines generally have a grade of about
1%. The ores are then “dressed” at the mine to enhance the gradeand produce concentrate. The raw materials imported by copper
smelting and refining plants in Japan are primarily copper
concentrates.

Copper concentrates

The SMM Group’s first HPAL plant. Located in the Province of
Palawan in the Philippines, CBNC produces mixed nickel-cobalt sulfides (MS) using HPAL technology for export to the Group’s Niihama
Nickel Refinery and Harima Refinery.

Coral Bay Nickel Corporation(CBNC)GRI

An acronym for Global Reporting Initiative. An organization that creates and promotes international guidelines and standards for sustainability reports. It issued its first guidelines in 2000, and has
transitioned to issuing standards from 2016.

P. 12, 117-118

An acronym for High Pressure Acid Leach. This technology enables
the recovery of nickel from low-grade nickel oxide ores that had
been conventionally difficult to process. The SMM Group was thefirst company in the world to apply it successfully on a commercial
scale. HPAL causes low-grade nickel oxide ores to react stably withsulfuric acid under high-temperature and high-pressure conditions,to produce a high-grade nickel raw material.

P. 1, 23, 28, 32, 35, 63, 88

An approach to human rights protection based on the United
Nations Guiding Principles on Business and Human Rights approvedby the United Nations Human Rights Council in 2011, this is a seriesof processes for performing preventive investigations to avoid andmitigate the negative effects that organizations have on humanrights, and for taking appropriate corrective action based on thefindings. The SMM Group built a system for human rights due diligence in FY2014 and has followed it since then.

P. 11, 53, 98

Human rights due diligence

ICMM

138

SUMITOMO METAL MINING CO., LTD.

An acronym for International Council on Mining and Metals. This isan organization composed of worldwide metal and mining companies and related industry bodies. Its mission is “In collaboration withothers, we will strengthen the social and environmental performance of the mining and metals industry and build recognition of
its contribution to local communities and society at large.”

Integrated Report 2023

P. 17, 49, 51, 81, 99

IoT

An acronym for “Internet of Things,” referring to communication
among objects via the Internet. Communication devices, such as
smartphones and PCs, and even items such as home appliances, arebecoming connected to the Internet, creating expectations for a
future society in which all things are connected to networks.

P. 12, 78, 80, 86, 88

LT/LN

Lithium Tantalate (LT) and Lithium Niobate (LN). These are used inchips for information and communication terminal SAW filters.

P. 23, 40, 70

Lithium Iron Phosphate(LFP)

LFP is a cathode material for lithium-ion batteries, like nickel-based
cathode materials (NCA, NMC), which are battery materials. While
nickel-based cathode materials are made from metals such as nickel,
manganese, and cobalt, LFP is made from relatively inexpensive lithium, iron, and phosphorus. It is mainly produced in China.

P. 15, 23, 35, 40, 69-70, 136

MCLE

An acronym for Matte Chlorine Leach Electrowinning. This is a manufacturing process adopted at the SMM Group’s Niihama Nickel
Refinery. Matte and mixed nickel-cobalt sulfides (MS) are dissolvedin chlorine at high temperature, then electrolysis is used to produce
high-purity nickel. MCLE is more competitive than other methods interms of cost, but poses significant operational challenges, and only
a few other producers outside of SMM have commercialized it using
similar technology.

P. 22, 28

MLCC

An acronym for Multi-Layer Ceramic Capacitor. These are capacitors
made of multiple layers of ceramic dielectric bodies for greater
capacity. In addition to consumer applications, in recent years they
are being used often in electric automobiles so demand is expected
to increase. The nickel paste produced by our Group is used in theinternal electrodes of MLCCs.

P. 70, 72-73, 75

MS

An acronym for Mixed Sulfides of nickel and cobalt. CBNC and THPAL
produce a mixed nickel-cobalt sulfide intermediate containing
about 55–60% nickel by weight. It is used as a raw material in the
production of electrolytic nickel, nickel sulfate, and other products.

P. 22, 63-64

Matte

A term for metal sulfides. Niihama Nickel Refinery produces electrolytic nickel using nickel matte (of about 75–80% purity) sourced
from PT Vale Indonesia Tbk.

P. 22, 64

NCA

An acronym for a type of secondary battery cathode material composed primarily of N (nickel), C (cobalt), and A (aluminum).

P. 73

NMC

An acronym for a type of secondary battery cathode material composed primarily of N (nickel), M (manganese), and C (cobalt).

P. 73

P. 64, 67, 77, 88

P. 12, 48, 92

SUMITOMO METAL MINING CO., LTD.

Data Section

Hydrometallurgical refining

A refining method in which metals and impurities are dissolved in asolution, and chemical reactions are used to separate them. The
method is stable and enables continuous processing, but incurs thecosts of chemical reagents.

P. 1, 28, 40-42, 47, 62-67, 88, 92

Pages

Internal carbon pricing(ICP)

P. 2, 16-17, 22, 35, 42, 47, 61,
63-65, 88, 92, 97

Electrolytic copper(electrolytic nickel and cobalt)

Explanation
A framework for encouraging investment that leads to decarbonization. Internal carbon pricing uniquely attaches prices to carbon
emissions within a company, attaches monetary values to GHG
emission reductions, and incorporates these into investment
cost-effectiveness.

P. 1, 28, 30, 66

A high-purity copper material produced through electrolytic refining
in a solution (electrolysis). At our Group’s Toyo Smelter & Refinery, we
dissolve copper concentrate in a flash furnace, pass it through a converter and a refining furnace, cast anodes in plate form, and produce
electrolytic copper through electrolytic refining. Electrolytic nickel andelectrolytic cobalt are also produced through electrolytic refining.

HPAL

Term

Pages

Integrated Report 2023

139

Data Section

Glossary

Term

Explanation
A smelting and refining method that uses lead to remove silver andimpurities contained in crude copper. Developed by Soga Riemon
around 1600. An alloy made by melting and rapidly cooling lead andcrude copper containing silver is heated, and silver-containing lead,which melts out at a melting point below that of copper, is heatedatop ash. The lead is absorbed by the ash and only the silver
remains. This allows the collection of silver while obtaining highpurity refined copper.

Nanban-buki

NiO (nickel oxide) for fuel cells

Nickel oxide ores
(laterite ore)

OJT

While predominantly higher-grade sulfide ores are used in nickel
refining, nickel oxide ores are more prevalent than nickel sulfides.
High refining costs and technical issues have limited the use ofoxide ores in nickel refining to date, but the SMM Group has succeeded in mass producing nickel from low-grade oxide ores basedon HPAL technology.
An acronym for On-the-Job Training, this is a method of training forthe acquisition of knowledge and skills through the performance ofactual work in the workplace under the guidance of superiors or
senior colleagues. Its aim is the fast acquisition of work execution
capabilities.

Pages

Silicon carbide (SiC)

P. 17, 35, 40, 68, 72-73

Smelting & Refining

This refers to the extraction of valuable metals from ore and otherraw materials, and is mainly divided into pyrometallurgical smelting
and hydrometallurgical refining. The SMM Group’s Toyo Smelter &Refinery in Saijo, Ehime Prefecture uses pyrometallurgical smelting
in its upstream processes (treatment processes), while Niihama
Nickel Refinery in Niihama, Ehime Prefecture uses only hydrometallurgical refining throughout.

P. 1-3, 7, 11, 16-18, 20-22, 28,
30-35, 40, 42-45, 47, 50-51, 60-64,
66-67, 74-77, 86-89, 92, 98, 102,
108, 123, 128, 129, 132, 136-137

Sustainable procurement

Sustainable procurement ensures that there is no complicity in negative effects such as infringement on human rights, environmental
destruction, or corruption in the procurement of parts, services, etc.
It affirms that companies in the supply chain do not cause such negative effects, requests corrections when necessary, and enhancestransparency in the supply chain.

P. 11, 29, 87, 91, 98 ,116

TC/RC

An acronym for Treatment Charge and Refining Charge. These arecosts that make up a part of the terms of purchase of metal raw
materials (copper concentrate, nickel ore, etc.). As an example, (LMEprice at a given point in time) – (TC/RC used in the transaction) +(other terms) is used as the purchase price of copper concentrates.

P. 60

TCFD

An acronym for the Task Force on Climate-related Financial
Disclosures. Established by the Financial Stability Board (FSB) to
examine the disclosure of climate-related information and how
financial institutions should respond. It recommends the disclosureof information concerning governance, strategy, risk management,
and metrics and targets concerning climate change-related risks
and opportunities.

P. 90-91

Taganito HPAL Nickel
Corporation (THPAL)The SMM Group’s second HPAL plant. Located in the Province ofSurigao del Norte in the Philippines, THPAL produces mixed nickel-cobalt sulfides (MS) using HPAL technology for export to theGroup’s Niihama Nickel Refinery and Harima Refinery.

P.2, 16-17, 22, 35, 40, 42, 47,
61-65, 88, 92, 97

xEVElectric vehicles. Types of electrification are diverse, differing by
method of supplying electricity. Types include BEVs that carry batteries, plug-in hybrids (PHEVs), hybrids (HEVs/MHVs), and fuel cell electric vehicles (FCEVs/FCVs).

P. 27, 69-70, 136

P. 63, 86, 88, 90

P. 1, 23, 27-28, 61, 64, 88

P. 28-29, 48, 81, 133

Off-JT

Pyrometallurgical smelting

A smelting method in which raw ore is melted in a high-temperature furnace and the metal is separated in the molten state. While itis possible to treat a large amount at one time, it requires periodic
repair of heat-resistant equipment.

SDGs

Listed in the 2030 Agenda for Sustainable Development andadopted at the UN Sustainable Development Summit in September
2015, the Sustainable Development Goals (SDGs) are a set of international goals for creating a sustainable and better world by 2030.
They are composed of 17 goals and 169 targets, and pledge to“leave no one behind.”

P. 7, 9-10, 12, 14, 85

Secondary battery cathodematerials

Materials used in the cathodes of batteries (secondary batteries) thatcan be charged and reused. The constituent components of secondary batteries break down roughly into cathode material, anodematerial, a separator, and electrolytic solution. The SMM Group produces the secondary battery cathode materials used in electric andhybrid automobiles.

P. 23, 70, 73, 75, 77, 88

Integrated Report 2023

Explanation
SiC is a power semiconductor material used mainly in electric power
control applications. Its use is expanding as a material capable ofreducing energy loss in high-capacity fields (high current and highwithstand voltage) demanded for drive control devices, particularly
in hybrid vehicles and electric vehicles.

P. 20, 32

A method of training conducted away from the workplace or separate from normal work. Its aim is the acquisition of advanced work
capabilities or other knowledge and skills not directly connected tonormal work based on systematic knowledge and theory.

SUMITOMO METAL MINING CO., LTD.

Term

P. 29, 81, 132

P. 63-64, 67, 77

SUMITOMO METAL MINING CO., LTD.

Data Section

140

Fuel cells are a clean and highly efficient method for generating
electricity and heat through the chemical reaction of hydrogen andoxygen. Plans for increased use of fuel cells in a wide range of applications, from homes to factories, are being formulated in countries
around the world. Nickel oxide powder for fuel cells is used in theelectrodes of solid oxide fuel cells (SOFCs), which deliver the highest
power generation efficiency.

Pages

Integrated Report 2023

141

Data Section

Eleven-Year Financial SummaryIFRS

J-GAAP
2023

2022

2021

2020

2019

2018

Net sales*3¥1,422,989¥1,259,091¥    926,122¥    851,946¥   912,208¥   929,746

Gross profit

250,106

257,794

150,876

109,471

126,637

149,015

Years ended March 31

Results for the year:

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

2018

2017

2016

2015

2014

2013

Net sales¥   933,517¥   786,146¥   855,407¥   921,334¥   830,546¥   808,540

Gross profit

157,089

122,296

113,862

174,257

124,822

140,650

Operating income

110,203

76,39059,720125,779

75,41895,785

Other income (expenses)

124,853(1,565)(12,764)

174,226

114,352

115,034

Years ended March 31

Results for the year:

Profit before tax

229,910357,434

123,379

79,03589,371

108,286

Profit (loss) before income taxes

105,795(5,999)559

123,261

111,006

122,455

Profit attributable to owners of parent

160,585

281,037

94,60460,60066,79090,227

Profit (loss) attributable to owners of parent

91,648(18,540)(309)

91,11380,25886,640Capital expenditures

140,845

64,53935,05950,68947,44574,675

Capital expenditures

74,589125,950

51,01355,232

66,44159,291

Depreciation

53,31046,45545,72945,35543,541

46,762

Depreciation

46,86544,232

46,141

38,12532,426

27,578Financial revenue (expenses)

10,804

10,546

8,927

6,250

3,530

(144)

Net cash provided by (used in) operating
activities

120,382

159,489

91,522

136,545

114,744

78,552

Net cash provided by (used in) operating
activities

79,405

43,796

119,704

120,003

80,014

114,665

Net cash provided by (used in) investing
activities(185,503)

9,796(32,393)(70,334)(142,354)(22,787)

Net cash provided by (used in) investing
activities(22,994)(143,219)(92,876)(105,024)(126,937)(88,745)

Net cash provided by (used in) financing
activities

49,336(129,618)(55,758)

9,149(29,047)(89,797)

Net cash provided by (used in) financing
activities(90,095)

70,392(4,003)(39,047)

81

21,549

Free cash flows(65,121)

169,285

59,12966,211(27,610)55,765

Free cash flows

56,411(99,423)

26,828

14,979(46,923)

25,920Financial position at year-end:

Financial position at year-end:

Total assets¥2,707,899¥2,268,756¥1,885,999¥1,719,690¥1,797,701¥1,732,333

Total assets¥1,699,037¥1,685,018¥1,630,800¥1,740,246¥1,572,367¥1,351,153

Equity1,789,296

1,557,418

1,222,983

1,110,860

1,151,280

1,113,349

Net assets

1,120,008

1,024,121

1,075,995

1,158,945

1,019,053

844,547

Non-current liabilities

447,340

326,547

337,694

402,520

388,943

378,438

Long-term loans payable after one year

257,409358,564

248,036

245,000

243,130

212,323

Interest-bearing liabilities

457,257

301,355

330,678

367,882349,798

361,775

Interest-bearing liabilities

362,297495,504

400,559

394,094

383,580

330,073

Working capital

369,668

382,810313,812

307,436

314,198

338,866¥   332.42¥    (33.61)¥     (0.56)¥   165.11¥   145.35¥   155.58

299.94——149.44129.71142.403,771.69

1,743.46

1,781.91

1,905.50

1,653.83

1,393.02

100.0

11.0

31.0

48.0

37.0

34.0

Amounts per share (Yen)*2:

Amounts per share (Yen)*2:¥     5,938¥     5,260¥     4,054¥     3,646¥    3,812¥    3,746

Basic earnings per share

584

1,023

344

221

243

327

—BasicDiluted earnings per share

584

1,023

344

221

243

295

—Diluted

Equity attributable to owners of parent per share

Net income (loss)

Shareholders’ equity*

1

205

301

121

78

73

100

ROA (%)

6.5

13.5

5.3

3.5

3.8

5.2

ROA (%)

Dividends
Key ratios:

Cash dividends
Key ratios:

5.42(1.12)(0.02)

5.50

5.49

6.94

1

ROE (%)

10.4

22.0

8.9

5.9

6.4

9.1

ROE (%)*

9.17(1.93)(0.03)

9.28

9.54

12.13

Equity ratio (%)

60.3

63.7

59.1

58.3

58.3

59.4

Equity ratio (%)*1

61.0

57.1

60.3

60.4

58.1

56.9

Interest-bearing liabilities to total asset ratio (%)

16.9

13.3

17.5

21.4

19.5

20.9

Interest-bearing debt to total asset ratio (%)

21.3

29.4

24.6

22.6

24.4

24.4

Debt-to-equity ratio (times)

0.28

0.21

0.30

0.37

0.33

0.35

Debt-to-equity ratio (times)*1

0.35

0.52

0.41

0.37

0.42

0.43

Current ratio (times)

2.2

2.4

2.1

2.7

2.1

2.6

Current ratio (times)

2.70

2.82

2.39

2.29

2.40

2.60

142

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Data Section*1 Shareholders’ equity is defined by the following equation.
Shareholders’ equity = Total shareholders’ equity + Accumulated other comprehensive income*2 The Company consolidated its shares at a rate of one share for every two shares of its common stock with October 1, 2017 as the effective date.
“Amounts per share” is calculated on the assumption that the consolidation of its shares was conducted at the beginning of the year ended March 31, 2018.
*3 Effective from the fiscal year ended March 31, 2021, the Company has changed its accounting policy for non-free supplied materials received from customers.
This change in accounting policy was applied retrospectively to the figure for the fiscal year ended March 31, 2020.

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

143

Data Section

1

Consolidated Financial Statements(1)

Consolidated Financial Statements

1)

Consolidated Statement of Financial Position
Notes

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets and goodwill
Investment property
Investments accounted for using equity
methodOther financial assets
Deferred tax assets
Other non-current assets

FY2021(As of March 31,2022)

FY2022(As of March 31, 2023)

Millions of yen

Millions of yen

Thousands of
U.S. dollars

213,977
187,310
49,342
420,136
44,354215,007
189,199
6,273
555,941
56,423

1,610,057
1,416,796
46,975
4,163,105
422,518

915,119

1,022,843

7,659,450

89, 34
16, 3410
17

11, 2112
14507,82256,586
3,477

629,451
68,2173,477

4,713,576
510,836
26,03715368,751

450,5123,373,611

16, 3418
17, 23

387,507
1,645
27,849497,496
1,822
34,081

3,725,446
13,644
255,212

1,353,637

1,685,056

12,618,362

2,268,756

2,707,899

20,277,812

Total non-current assets
Total assets

FY2021(As of March 31,
2022)

Notes

6

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Bonds and borrowings
Other financial liabilities
Provisions
Retirement benefit liability
Deferred tax liabilities
Other non-current liabilities

19, 3420, 3420, 21, 34
22
24

20, 3420, 21, 34
22
23
18
24

Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury shares
Other components of equity
Retained earnings

25
7, 25
25
25

Total equity attributable to owners ofparentNon-controlling interests
Total equity
Total liabilities and equity

FY2022(As of March 31, 2023)

Millions of yen

Millions of yen

Thousands of
U.S. dollars

206,013
120,983
7,027
24,9406,101
19,727

251,696
158,409
10,337
24,968
8,663
17,1901,884,799
1,186,229
77,408
186,970
64,872
128,725

384,791

471,2633,529,003

210,249
9,579
25,107
5,310
75,631
671

298,848
8,816
40,361
4,396
94,041878

2,237,891
66,018302,239
32,919704,216
6,575

326,547

447,340

3,349,858

711,338

918,6036,878,860

93,242
90,213(38,056)
124,304
1,175,626

93,24289,800(38,076)
220,383
1,266,322

698,233
672,458(285,128)
1,650,315
9,482,717

1,445,329

1,631,671

12,218,594

112,089

157,625

1,180,358

1,557,418

1,789,296

13,398,952

2,268,756

2,707,899

20,277,812

Data Section

As to the pages indicated in "NOTES," please refer to the Consolidated Financial Statements at the following address.
https://www.smm.co.jp/en/ir/library/consolidated_financial_statement/pdf/Consolidated_Financial_Statement_2023.pdf

144

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

SUMITOMO METAL MINING CO., LTD.

- 1 -

- 2 -

Integrated Report 2023

145

Data Section

2)

Consolidated Statement of Profit or Loss and Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income

Consolidated Statement of Profit or Loss
FY2021
Notes (From April 1, 2021
to March 31, 2022)

FY2021
Notes (From April 1, 2021
to March 31, 2022)

FY2022(From April 1, 2022
to March 31, 2023)

27
28

1,259,091(1,001,297)

1,422,989(1,172,883)

28
29
29

257,794(52,711)31,884(2,969)250,106(63,997)
29,389(8,596)

1,872,892(479,235)
220,076(64,370)

15

57,53736,536

273,59630
30

81,850(15,951)

4,672(18,200)

34,986(136,289)6
18357,434(58,903)229,910(59,469)

1,721,656(445,327)

Profit298,531

170,441

1,276,329

Profit attributable to:
Owners of parent
Non-controlling interests

281,037
17,494

160,5859,856

1,202,524
73,806

298,531

170,441

1,276,329

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Finance income
Finance costs
Share of profit of investments accounted forusing equity method
Other income
Other expenses
Profit before tax
Income tax expense

ProfitEarnings per share
Basic earnings per share
Diluted earnings per share

32
32

Yen
1,022.80
1,022.80

Millions of yen

Yen
584.44584.44

298,531

170,441

Thousands of
U.S. dollars
1,276,329

31

39,7488,810

65,973

31

3,660

2,852

21,35715, 31

137

75

562

43,545

11,73787,891

31

1,167

1,662

12,44631

46,92258,729439,786

15, 31

25,13044,579333,825

73,219104,970786,057

Millions of yen

Thousands of
U.S. dollars
10,655,901(8,783,009)

Millions of yen

U.S. dollars
4.38
4.38

ProfitOther comprehensive income
Items that will not be reclassified to profit
or loss:
Financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit
plans
Share of other comprehensive incomeof investments accounted for using
equity method
Total of items that will not bereclassified to profit or loss
Items that will be reclassified to profit orloss:
Cash flow hedges
Exchange differences on translation offoreign operations
Share of other comprehensive incomeof investments accounted for using
equity method

FY2022(From April 1, 2022
to March 31, 2023)

Total of items that will be reclassified to
profit or loss
Other comprehensive income, net of tax

Millions of yen

116,707873,948415,295

287,148

2,150,277

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

387,078
28,217263,161
23,987

1,970,653
179,624Comprehensive income

415,295

287,148

2,150,277

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Data Section

116,764

Comprehensive income

As to the pages indicated in "NOTES," please refer to the Consolidated Financial Statements at the following address.
https://www.smm.co.jp/en/ir/library/consolidated_financial_statement/pdf/Consolidated_Financial_Statement_2023.pdf

146

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

- 3 -

- 4 -

147

Data Section

3)

Consolidated Statement of Changes in Equity

FY2022 (From April 1, 2022 to March 31, 2023)

FY2021 (From April 1, 2021 to March 31, 2022)

Equity attributable to owners of parent
Other components of equity

Equity attributable to owners of parent
Other components of equity
Notes

Share capital

TreasurysharesCash flow
hedgesMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

93,24287,604(38,027)(45,083)(1,987)

72,218

–

–

–

–

–

–

–

–

–

61,4891,043

39,737–––61,4891,043

39,737

Profit31

Total comprehensive income

Notes

Financialassetsmeasured atfair value
through othercomprehensive income

Millions of
yen
As of April 1, 2021
Other comprehensive income

Capitalsurplus

Exchangedifferenceson translationof foreign
operations

As of April 1, 2022
ProfitOther comprehensive income
Total comprehensive income

–

26

–

–

–

–

–

–

7

–

(413)

–

–

–

–

16

–

–

–

–

–

(3,598)

–

(413)

(20)

–

–

(3,598)93,24289,800(38,076)

105,602725

114,056

Total equity

–

–

–

–

7

–

2,609

–

–

–

–

Transfer to retained earnings(3,113)93,242

90,213(38,056)

16,406(944)

108,842

Transactions with owners - total
As of March 31, 2023

Equity attributable to owners of parent
Other components of equity
Total

Retainedearnings

Total

Noncontrollinginterests

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

As of April 1, 2022–

124,304

1,175,626

1,445,329

112,089

1,557,418

Profit––160,585

160,5859,856

170,441

2,899

102,576–

102,576

14,131

116,707

2,899

102,576

160,585

263,161

23,987287,148
(21)

Notes

Equity attributable to owners of parent
Other components of equity
Notes

Total

Noncontrollinginterests

Total equity

Total

Retainedearnings

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen–

25,148945,956

1,113,923

109,060

1,222,983

Remeasurements ofdefinedbenefit plans

As of April 1, 2021
ProfitOther comprehensive income

31

Total comprehensive income––

281,037

281,037

17,494

298,531

3,772

106,041–

106,041

10,723

116,764

3,772

106,041

281,037

387,078

28,217415,295

Purchase of treasury shares

25

–

–

–

(29)

–

(29)

Disposal of treasury shares

25

–

–

–

0

–

0

Dividends

26

–

–

(58,252)(58,252)(12,053)(70,305)

Changes in ownership interest in
subsidiaries

7

–

–

–

2,609

(13,119)(10,510)

–

–

–

–

(16)

(16)

Loss of control of subsidiaries
Transfer to retained earnings

16

Transactions with owners - total(6,885)

6,885

–

–

–

(6,885)(51,367)(55,672)(25,188)(80,860)–

124,304

1,175,626

1,445,329

112,089

1,557,418

Other comprehensive income

31

Total comprehensive income

Remeasurements ofdefinedbenefit plans

Purchase of treasury shares

25

–

–

–

(21)

–

Disposal of treasury shares

25

–

–

–

1

–

1

Dividends

26

–

–

(76,386)(76,386)(7,155)(83,541)

Changes in ownership interest in
subsidiaries

7

–

–

–

(413)

28,70428,291

Transfer to retained earnings

16

Transactions with owners - total
As of March 31, 2023

(2,899)(6,497)

6,497

–

–

–

(2,899)(6,497)(69,889)(76,819)

21,549(55,270)–

220,383

1,266,322

1,631,671

157,625

1,789,296

Data Section

As of March 31, 2022

(3,772)(3,772)

8,812

Dividends–

As of March 31, 2022

1,669

–

–

(3,113)89,196

–

26

–

–

–

Changes in ownership interest in
subsidiaries

–

–

1

Dividends

–

–

–

0

Changes in ownership interest in
subsidiaries–

108,842

–

–

–

–

(944)

–

25

–

(29)

16,406–

Disposal of treasury shares––(38,056)

–

8,812

0

2,609

90,213––

0–93,242

1,669

–

–

Millions of
yen

–

25

16

Millions ofyen

89,196

Disposal of treasury shares

Transactions with owners - total

Millions of
yen

–

–

Transfer to retained earnings

Millions of
yen

(21)

–

–

Millions of
yen

–

–

–

Millions of
yen

–

(29)

–

Treasuryshares–––Capitalsurplus–––

Share capital

25

25

–

Cash flow
hedgesFinancialassetsmeasured atfair value
through othercomprehensive income

Purchase of treasury shares

Purchase of treasury shares

Loss of control of subsidiaries

31

Exchangedifferenceson translationof foreign
operations

As to the pages indicated in "NOTES," please refer to the Consolidated Financial Statements at the following address.
https://www.smm.co.jp/en/ir/library/consolidated_financial_statement/pdf/Consolidated_Financial_Statement_2023.pdf

148

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

SUMITOMO METAL MINING CO., LTD.

- 5 -

- 6 -

Integrated Report 2023

149

Data Section

4)

Equity attributable to owners of parent
Other components of equity
Notes

Share capital

Exchangedifferenceson translationof foreign
operations

TreasurysharesCash flow
hedgesThousands of
U.S. dollars

Thousands of
U.S. dollars

698,233

675,550(284,978)122,855(7,069)

–

–

–

–

–

–

–

–

–

667,935

12,49865,988

As of April 1, 2022
ProfitOther comprehensive income

CapitalsurplusFinancialassetsmeasured atfair value
through othercomprehensive income

31

Thousands of Thousands of Thousands of Thousands of
U.S. dollars
U.S. dollars
U.S. dollars
U.S. dollars
815,052–––

667,935

12,49865,988Purchase of treasury shares

25

–

–

(157)

–

–

–

Disposal of treasury shares

25

–

0

7

–

–

–

Dividends

26

–

–

–

–

–

–

Changes in ownership interest in
subsidiaries

7–(3,093)

–

–

–

–

Transfer to retained earnings

16

–

–

–

–

–

(26,943)–(3,093)

(150)

–

–

(26,943)698,233

672,458(285,128)

790,789

5,429

854,096

Total comprehensive income

Transactions with owners - total
As of March 31, 2023

Equity attributable to owners of parent
Other components of equity
Total

Thousands of
U.S. dollars

Thousands of
U.S. dollars

As of April 1, 2022–

930,837

8,803,549

10,823,192

839,366

11,662,558

Profit––1,202,524

1,202,524

73,806

1,276,329

21,709768,129–

768,129

105,818

873,948

21,709768,129

1,202,524

1,970,653

179,624

2,150,277(157)

Other comprehensive income

31

Total comprehensive income

Retainedearnings

Total

Total equity

Thousands of Thousands of Thousands of Thousands of
U.S. dollars
U.S. dollars
U.S. dollars
U.S. dollars

Purchase of treasury shares

25

–

–

–

(157)

–

Disposal of treasury shares

25

–

–

–

7

–

7

Dividends

26

–

–

(572,008)(572,008)(53,579)(625,588)

Changes in ownership interest in
subsidiaries

7

–

–

–

(3,093)214,947

211,854

Transfer to retained earnings

16

Transactions with owners - total
As of March 31, 2023

(21,709)(48,652)

48,652–––(21,709)(48,652)(523,356)(575,251)

161,367(413,883)–

1,650,315

9,482,717

12,218,594

1,180,358

13,398,952

SUMITOMO METAL MINING CO., LTD.

FY2021
Notes (From April 1, 2021
to March 31, 2022)

FY2022(From April 1, 2022
to March 31, 2023)
Thousands of
U.S. dollars

Millions of yen

Millions of yen

357,434
46,455(1,364)269

229,91053,310(1,428)3,444

1,721,656
399,206(10,693)
25,790(57,537)(36,536)(273,596)(74,374)25

187(5,100)(4,642)(34,761)(56)(31,884)
2,969

4,257
(29,389)
8,596

31,878(220,076)
64,370(28,260)

113

846(92,717)(133,712)(1,001,288)

44,66338,689289,718(9,401)

1,861

13,936904(11,154)(83,526)

Cash flows from operating activities
Profit before tax
Depreciation and amortization
Loss (gain) on sale of fixed assets
Impairment losses
Share of loss (profit) of investments
accounted for using equity method
Loss (gain) on sale of subsidiaries
Increase or decrease in retirement benefit
asset or liability
Increase (decrease) in provisions
Finance income
Finance costs
Decrease (increase) in trade and otherreceivables
Decrease (increase) in inventories
Increase (decrease) in trade and otherpayablesDecrease (increase) in advance payments
to suppliers
Increase (decrease) in accrued
consumption taxes
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of securities
Proceeds from redemption of securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Proceeds from sale of investment securities
Purchase of shares of subsidiaries andassociates
Proceeds from sale of shares ofsubsidiaries and associates
Collection of short-term loans receivable
Payments for long-term loans receivableCollection of long-term loans receivable

15,787

13,770103,115

167,788
3,483
33,248(2,419)(42,632)
21

137,114
11,05628,657(5,927)(50,662)144

1,026,764
82,792
214,595(44,384)(379,377)
1,078

159,489

120,382

901,468(43,185)83–(55,408)(387)
50,848(6,279)6,911(123,823)(2,898)
380,770(47,020)
51,752(927,235)

1,647

565

4,231

(1,162)
7,483(7,087)
10,053(53,070)
75,281(9,777)(30,403)(227,670)

25

0

0

278
(29,144)
26,4193,033(90,983)
103

22,712(681,316)
771–

Integrated Report 2023

SUMITOMO METAL MINING CO., LTD.

- 7 -

- 8 -

Integrated Report 2023

Data Section

As to the pages indicated in "NOTES," please refer to the Consolidated Financial Statements at the following address.
https://www.smm.co.jp/en/ir/library/consolidated_financial_statement/pdf/Consolidated_Financial_Statement_2023.pdf

150

Noncontrollinginterests

Remeasurements ofdefinedbenefit plans

Notes

Consolidated Statement of Cash Flows151

Data Section

Corporate Data and Investor Information (As of March 31, 2023)
FY2021
Notes (From April 1, 2021
to March 31, 2022)
Millions of yen
Proceeds from sale of interests in
subsidiaries resulting in change in scope of
consolidation
Other
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from share issuance to noncontrolling shareholders
Dividends paid
Dividends paid to non-controllingshareholders
Proceeds from sale of shares ofsubsidiaries not resulting in change inscope of consolidation
Purchase of shares of subsidiaries not
resulting in change in scope of
consolidation
Other

33

33
33
33
33
33
33

26

FY2022(From April 1, 2022
to March 31, 2023)
Millions of yen

Corporate Data

Thousands of
U.S. dollars

Company name113,002

1,592

11,922

(465)

354

2,651

9,796

(185,503)(1,389,119)

190,212(184,833)
15,412(47,688)
64,007(84,007)406,013(351,158)
110,061(42,928)
89,925(105,000)

3,040,385(2,629,609)
824,180(321,462)
673,394(786,281)

8,865

24,073

180,268(58,252)(76,386)(572,008)(12,053)(7,155)(53,579)

Number of Employees

7,330 (Consolidated)

President &Akira Nozaki
Representative Director

Head Office11-3, Shimbashi 5-chome,
Minato-ku, Tokyo 105-8716, JapanFounded1590

Main Branch

Osaka Branch

Incorporated

1950

BranchNagoya Branch

Capital¥93.2 billion

Research centers

Listing

Prime Market

Battery Research Laboratories

No. of subsidiaries(consolidated)

52 (including the money held in trust which is(Ehime Prefecture)

No. of equity-method
affiliates

Sumitomo Metal Mining Co., Ltd.

13

Contact Information(for the year ended March 31, 2023)¥229.9 billion(for the year ended March 31, 2023)

Investor Information
–

3,746

28,052

7(19,374)

–

–

2, 33

(1,907)(1,855)(13,891)(129,618)

49,336369,447

39,667(15,785)(118,204)

Number of authorized shares 500,000,000
Number of issued and
290,814,015
outstanding shares
Number of shareholders
58,107
Listing of shares
Tokyo
Stock transaction unit
100 shares

158,373

213,977

1,602,344

Note: SMM consolidated its common stock at a rate of one share for every two shareswith October 1, 2017 as the effective date.

15,937

16,815125,917

213,977

215,0071,610,057

Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodEffect of exchange rate changes on cash andcash equivalents

8

Cash and cash equivalents at end of period

8

March 31

Ordinary General
June
Meeting of Shareholders
Common Stock

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

Registrar of Shareholders

7

Closing Date

Materials Laboratories (Tokyo)
Ichikawa Research Center (Chiba Prefecture)deemed to be a consolidated company)

Net sales (consolidated) ¥1,423.0 billion
Profit before tax(consolidated)

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

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8233, Japan

Method of Public NoticeElectronic notification (However, if electronic notification is notavailable due to unavoidable circumstances, notice will be publishedin the Nihon Keizai Shimbun newspaper.)Independent Public Accountant
KPMG AZSA LLC

Breakdown of Shareholders
Number ofshares held
(thousands)

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023

Shareholding
ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

45,593

16.59

Custody Bank of Japan, Ltd. (Trust Account)

18,567

6.76

Toyota Motor Corporation

11,058

4.02

STATE STREET BANK WEST CLIENT–TREATY 505234

4,813

1.75

Sumitomo Realty & Development Co., Ltd.

3,745

1.36

SUMITOMO LIFE INSURANCE COMPANY

3,737

1.36

JPMorgan Securities Japan Co., Ltd.

3,574

1.30

SMBC Nikko Securities Inc.

3,237

1.18

JP MORGAN CHASE BANK 385781

3,123

1.14

Nippon Life Insurance Company

3,110

1.13

Notes: 1. We own 16,049 thousand shares of treasury stock.
2. The shareholding ratios were calculated based on the total number of issued shares less treasury stock.

(Thousands of shares) Financial
Institutions Securities
Companies Other Domestic
Entities Foreign Entities
 Individuals andOthers Treasury Stock

SUMITOMO METAL MINING CO., LTD.

- 9 -94,52832.50%

15,361

5.28%

31,71310.91%

100,333
32,83034.50%
11.29%

16,0495.52%

Integrated Report 2023

Data Section

152

1-2, Tsukudo-cho, Shinjuku-ku, Tokyo

Major Shareholders
Name of Shareholders

As to the pages indicated in "NOTES," please refer to the Consolidated Financial Statements at the following address.
https://www.smm.co.jp/en/ir/library/consolidated_financial_statement/pdf/Consolidated_Financial_Statement_2023.pdf

Niihama Research Laboratories(Ehime Prefecture)

153

Data Section

Attestation of Validity

On the issuance of the Sumitomo Metal
Mining Co., Ltd. Integrated Report 2023

Since 2016, we have published these integrated reports to serve as a tool for dialogue withstakeholders inside and outside the Group.
The Sumitomo Metal Mining Co., Ltd. Integrated Report 2023, our eighth integrated
report, describes value creation by our Group as we further integrate business with sustainability. It places particular focus on progress made under our 2021 3-Year Business Plan
during its second year. In light of the creation of our new Sustainability Report 2023, thisIntegrated Report covers only sustainability information of a material nature for greaterconciseness.
As the officer ultimately responsible for the production of this report, I attest that theprocess of preparing the report is legitimate and that its content described is accurate.
I hope that this Integrated Report will help our diverse stakeholders, including shareholders and investors, understand our Group’s efforts toward sustainable growth and therealization of a sustainable society. We will continue to strive to appropriately disclose
information.

Mihoko Yano
Executive Officer
In charge of Public Relations & Investor Relations Department

154

SUMITOMO METAL MINING CO., LTD.

Integrated Report 2023