Nippon Denko Group

Medium/Long-Term Business Plan
-Toward "Our Ideal State" in 2030-

November 29, 2023

ZX
TSE Prime Market
5563

INDEX

1

Five Core Businesses

2

Review of
the 8th Medium-Term Business Plan
‐From the "Desired State" to "Our Ideal State"

3

Outline ofMedium/Long-Term Business Strategies‐Toward "Our Ideal State" in 2030
‐Providing Value to Stakeholders‐<Target 1> Growth Strategy‐<Target 2> To Improve and Stabilize Profitability‐<Target 3> Financial Strategy‐<Target 4> Sustainability-Related Measures

4

Medium/Long-Term Business Strategies ofFive Core Businesses© 2023 Nippon Denko Co., Ltd.

1

INDEX

1

Five Core Businesses

2

Review of
the 8th Medium-Term Business Plan
‐From the "Desired State" to "Our Ideal State"

3

Outline ofMedium/Long-Term Business Strategies‐Toward "Our Ideal State" in 2030
‐Providing Value to Stakeholders‐<Target 1> Growth Strategy‐<Target 2> To Improve and Stabilize Profitability‐<Target 3> Financial Strategy‐<Target 4> Sustainability-Related Measures

4

Medium/Long-Term Business Strategies ofFive Core Businesses© 2023 Nippon Denko Co., Ltd.

2

1. Five Core Businesses (1)Five Core
Businesses

Our Group aims to be a company on a constant quest for a better future by supporting people's lives through "Materials" and "Environment"

Ferroalloys

Facility: Tokushima Plant,
Pertama Ferroalloys Sdn. Bhd. (overseas affiliates)

Materials

 Top domestic manganese ferroalloy supplier Green ferroalloy production using hydroelectric power (overseas affiliates) Distinctive material lineup, such as "No.1" and domestically produced "One-of-a-kind"products in the Japanese market

Main
Products

SLP ferromanganese
Silicomanganese, Ferrosilicon
Additives for steel to improve its hardness, tensile strength,and other properties
Desulfurization and deoxidation agent in steel

Main
Applications

Incineration Ash Recycling
Environment

digitalization society

High-carbon ferromanganese

Main
Products

Facility: Chuo Denki Kogyo (Kashima City)
Contributing to a recycling-oriented society by recovering resourcesfrom incineration ash• To increase the capacity of landfill sites by collecting and treating

incineration ash• To extract metals containing valuable metals from incineration ash

High-carbon ferromanganese

Zirconium oxide / Boron oxide / Manganese inorganic
chemical products / Ferroboron / Metal hydride alloys /Cathode materials for lithium-ion batteries
Ceramic capacitors / Glass substrates for displays /Additives for electronic components / Neodymium magnets/ Anode materials for HVs' nickel-hydride batteries /Cathode materials for EVs' lithium-ion batteries

Facility: Koriyama Plant

 Contribute to the realization of circular economy andcarbon-neutral society through our wastewater
purification and pure water production technology andservices

Main
Services &Products

Collection and treatment of
incineration ash
Metals containing valuable metals
ECOLAROCK (Roadbed material)

Main
Products

Main
Applications

Precious and nonferrous metals
for industrial purposes
Construction materials such as
roadbed materials

Main
Applications

Metals containing
valuable metals

Main
Applications

Aqua Solutions• To recycle incineration ash as roadbed material

Changed From Four Core Businesses
to Five Core Businesses

Facility: Toyama Plant (Imizu and Takaoka area),
Myoko Plant, Tokushima Plant

 Providing materials for advanced components supporting a decarbonization andConsistent supply of high-quality ferroalloys with outstanding global competitivenessFunctional Materials

Wastewater treatment
equipment
Pure water production
systemTreatment of industrial
wastewater
Production of pure water
for hydrogen stations, etc.

Electric Power

Zirconium oxide

Facility: Hidaka Office Stable sale of electricity by utilizing renewable energy

Feed-In Tariff system (FIT) Stable supply of green electricity through the largest
private-sector owned dams
 Introducing the environmental advantages of green
electricity

Horomangawa
Hydroelectric power
plantsPure water production
systemFrom January 2024, we will divide the "Environment Business" into the "Incineration Ash Recycling Business (currently, Melting &Solidification of Incineration Ash Business)" and the "Aqua Solutions Business (currently, Environmental Systems Business)" and change
the names accordingly.
© 2023 Nippon Denko Co., Ltd.

3

1. Five Core Businesses (2)Five Core
Businesses

Net sales by segment

Ordinary profit by segment （Underlying profit basis*)*Earnings excluding inventory impact and one-time factors

Electric Power
Aqua Solutions

3%

OthersIncineration Ash Recycling 6%2%

Projection for FY2023
Electric Power

2%

Aqua Solutions

2%

2%

Incineration Ash Recycling 10%

10%Functional Materials

18%

Others5%

consolidated

consolidated¥78.0 bil.

¥5.7 bil.

Ferroalloys

69%

Functional Materials

37%

Ferroalloys

44%

44%

37%

© 2023 Nippon Denko Co., Ltd.

4

INDEX

1

Five Core Businesses

2

Review of
the 8th Medium-Term Business Plan
‐From the "Desired State" to "Our Ideal State"

3

Outline ofMedium/Long-Term Business Strategies‐Toward "Our Ideal State" in 2030
‐Providing Value to Stakeholders‐<Target 1> Growth Strategy‐<Target 2> To Improve and Stabilize Profitability‐<Target 3> Financial Strategy‐<Target 4> Sustainability-Related Measures

4

Medium/Long-Term Business Strategies ofFive Core Businesses© 2023 Nippon Denko Co., Ltd.

5

2-1. From the "Desired State" to "Our Ideal State" in 2030

Medium/Long-TermBusiness Strategies

 The period of the 8th Medium-Term Business Plan (FY2021-FY2023) corresponds to the period to lay the groundwork for realizing the"Desired State" in 2030
 We will elevate the "Desired State" to "Our Ideal State“ by formulating this medium/long-term business strategy (FY2024-FY2030)

8th Medium-Term Business Plan (FY2021 to FY2023)
The period to lay thegroundwork for realizingthe "Desired State"
in 2030
Basic Policy
Establish a foundation for growththat leads to the next 10 years;"4 Cores + Growth"
Key Tasks Strengthening existing

businesses Tackling new businesses Strengthening the corporate
structure to adapt to thechanging business environment

 Ferroalloys••

In Japan: To stabilize earnings by consolidating production and revising priceformulasOverseas: To steadily increase production and sales volume by improving ourmanufacturing system

 Businesses other than Ferroalloys(Functional Materials, Environment)••

Equipment capacity expansion (zirconium oxide, boron oxide, LIB cathode materials,
constructing the incineration ash melting furnace No. 4, restarting ferroboron
production)
To increase earnings by passing on higher electricity charges to prices

 R&D and new businesses• To enhance collaborative research on new ion-exchange inorganic crystal etc. withexternal organizations• To invest in venture capital funds

FY2030
A company on a constant quest
for a better future by supporting
people's lives through materials
and the environment
Concept of"Desired State" in 2030

Formulating and implementing
medium/long-term business strategies

 Sustainability-related (Established a sustainability committee in Jan. 2022)•••

GX: Formulation of CN targets, endorsement in GX League, and energy-saving
activities
DX: Formulation of DX vision and roadmap, commencement of DX education
Human capital management: Setting targets and KPIs for HR strategy

Elevating it to"Our Ideal State" in 2030
© 2023 Nippon Denko Co., Ltd.

6

2-2. Review of the 8th Medium-Term Business Plan

Review

Underlying ordinary profit, which excludes inventory impact, etc., almost achieved the target level set in the 8th Medium-Term Business Planin spite of business conditions being challenging due to factors such as "COVID-19," "the Russian invasion of Ukraine," and "continued
monetary tightening in the U.S. and Europe."▍ Variation in consolidated financial results
FY2021
ActualNet sales（bil.yen）

FY2022
Actual79.3

66.0▍ Variations in capital investment and R&D expenses

FY2023
Projection

FY2023
8th MTBP

Capital investment

8th Medium-TermBusiness Plan period（Underlying profit: Earnings excluding inventory impact and one-time factors)

Ordinary Profit

6.2■ Ferroalloys business（bil.yen）■ Businesses other than ferroalloys

4.3

9.1
2.6

2.6 2.6
Underlying
Actual profit

2.5

3.7
1.3 1.9
Underlying
Actual profit

2.9 3.2(0.4)Underlying

Actualprofit4.9
0.9

bil. yenbil. yen bil. yenbil. yen

ROE ROE
13% 11%

ROE ROE
12% 7%ROE ROE
4%
7%

ROE
8%

bil. yen

Total shareholder return ratio(8th Medium-Term Business Plan period)

5.3

0.8

4.0

0.6
0.4

0.3

MTBP

10.4 5.6

bil. yen bil. yen

8th Medium-TermBusiness Plan period

5.1

6.9 5.2

2.5 5.7（bil.yen）（bil.yen）

60.0

78.0

R&D

6.0

Previous
MTBP(annualaverage)

FY2021

FY2022

FY2023projection

Previous
MTBP(annualaverage)

FY2021

FY2022

FY2023projection*Amounts and descriptions are based on the year of approval52%© 2023 Nippon Denko Co., Ltd.

7

INDEX

1

Five Core Businesses

2

Review of
the 8th Medium-Term Business Plan
‐From the "Desired State" to "Our Ideal State"

3

Outline ofMedium/Long-Term Business Strategies‐Toward "Our Ideal State" in 2030
‐Providing Value to Stakeholders‐<Target 1> Growth Strategy‐<Target 2> To Improve and Stabilize Profitability‐<Target 3> Financial Strategy‐<Target 4> Sustainability-Related Measures

4

Medium/Long-Term Business Strategies ofFive Core Businesses© 2023 Nippon Denko Co., Ltd.

8

3-1. Outline of Medium/Long-Term Business Strategies for"Our Ideal State" in 2030

Medium/Long-TermBusiness Strategies【Management Philosophy】
To help create an affluent future through sustainable growth by developing and providing distinctive products, technologies, and services"Our Ideal State" in 2030

Providing value todiverse stakeholders

A company on a constant quest for a better future by supporting people's lives
through materials and the environment
To achieve both "Solving Social Issues"&"Enhancing Corporate Value"

Promoting sustainability-oriented management

Numerical targets (consolidated) To solve social issues by providing products, technologies and services
 To address social issues in the course of conducting business activities
 To enhance the corporate foundation for sustainable growth

Net Sales
Ordinary Profit
ROE： ¥110.0 bil. or larger：：¥13.0 bil. or larger
10% or higher(Ref.) Projection for FY2023： ¥78.0 bil.
Net Sales¥5.7 bil.
Ordinary Profit ： (Underlying
profit basis)
ROE

：

7%

Four Targets
Growth Strategy• To expand business by proactively
investing in growing fields• To restructure our business portfolio

To Improve and Stabilize Profitability

Financial Strategy• ROE 10% or higher• To establish a stable earning structure• To reinforce non-current assets as asource of profits• Appropriate financial leverage• To proactively return profit toshareholders

Sustainability-Related Measures
Implementation of measures alignedwith medium/long-term strategies
・GX
・DX
・Human capital management, and DE&I

© 2023 Nippon Denko Co., Ltd.

9

3-2. Providing Value to Diverse Stakeholders
Building Trust and Earn High Evaluation

Medium/Long-TermBusiness Strategies

Providing value to diverse stakeholders to form a positive cycle of trust, appreciation, and growth

Shareholders

Employees
 Appropriate evaluation, compensation,

and welfare benefits
 A secure and safe working environmentand diverse work styles
 Career development through humancapital management

 To enhance corporate value
 To proactively return profit

Business Partners

Local Communities Stable supply of products (strengthening

 Creation of jobs and revitalization of local

the supply chain) Supplying materials to contribute to asustainable society

Financial Institutions
 Creditbility for financial transactions
 Making our shares as ESG-related

ZX

communities(Participation in local activities [disasterprevention and festivals], and strengthening
relationships with local organizations)Public Administration
 Conversion of the Incineration Ash

Recycling Business to social infrastructure Tax payment based on stable earnings© 2023 Nippon Denko Co., Ltd.

10

3-3. Target 1 - Growth Strategy (1)<Medium/Long-Term Business Environment and Our Strategy>

Medium/Long-TermBusiness Strategies

We regard changes in the business environment that would contribute to the building of a sustainable society as a medium/long-term
growing fields, and aim to expand the scale and scope of our businesses while leveraging the strengths of our businesses in these fields

Development of themobility field(Electrification and digitalizationof automobiles, etc.)

Development of
next-generation materials
Launch of new businesses

Enhancement of production
capabilities in thefunctional materials field(Zirconium oxide, etc.)

Significant expansion of theIncineration Ash Recycling Business
Expansion of the sales of equipment for
purifying wastewaterfrom the plating process

Hydrogensociety

Ferroalloys
Functional Materials
Incineration Ash Recycling
Aqua Solutions
Electric Power

Circulareconomy(Urban mining)

Materials

Expansion of the sales ofpure water production system

Environment

Existing Businesses

Needs forgreen materials

Solving supply
chain challenges Expansion of domestically produced
one-of-a-kind products in the Japaneseandstrengthening
market (Ferroboron, boron oxide, etc.)

Strengthening theoverseas business of ferroalloys(Pertama project)© 2023 Nippon Denko Co., Ltd.

11

3-3. Target 1 - Growth Strategy (2)<Strategic Investment and Business Portfolio>

Medium/Long-TermBusiness Strategies

To create a business portfolio that is less susceptible to the ferroalloys market conditions by proactively and strategically investing ¥45.0¥50.0 bil., more than three times the current medium-term plan, in growing fields
Ref. (Strategic investment)
Medium/long-term business strategies: ¥45.0 - ¥50.0 bil. / 7 years (FY24-FY30)
Current medium-term business plan:¥6.0 bil. / 3 years (FY21-FY23)

Business expansion through proactive strategic investment

Significant expansion of businesses other than the domestic Ferroalloys Business Ferroalloys• Overseas: To strengthen overseas business (Pertama and Kudumane) Functional Materials• Large investment to respond to the electrification and digitalization of
automobiles

 Incineration Ash Recycling• Significant expansion of existing processing capacity(130 thousand to 220 thousand tons)＜Net sales＞

FY2023
Projection

9th Medium-TermBusiness Plan
Target for FY2027"Our Ideal State"
in 2030¥78.0 bil.

¥95.0 bil.

¥110.0 bil. or larger

Expand businesses other than the domestic Ferroalloys
Business by more than double

2%
2%
3%

1%
3%

10%

18%

55%

(Overseas) 5%(Overseas) 14%(Domestic) 64%

Ferroalloys(Domestic) 51% Businessin Japan• Expansion of wastewater treatment business

69%

Businesses
other than thedomestic
Ferroalloys

19%

6%

 Aqua Solutions
 Other Strategic Investment

2%

65%

45%

• Investing in GX and DX• New businesses (new battery materials and new wastewater adsorbents)• To strengthen existing businesses by acquiring and collaborating withcompetitors

FY2023Ferroalloys

Functional Materials

FY2027
Incineration Ash Recycling

FY2030Aqua Solutions

Electric Power

Others© 2023 Nippon Denko Co., Ltd.

12

3-3. Target 1 - Growth Strategy (3)<R&D and Exploration of Business Opportunities>

Medium/Long-TermBusiness Strategies

Aiming to increase corporate value by creating new products and businesses that would help solve social issues

To strengthen the development of new products
 Continuously allocating resources to the development of new products
utilizing our proprietary technologies• High performance zirconium oxide (Response to needs for smaller MLCC)• Materials for next-generation secondary batteries• New adsorbents (Inorganic adsorbents)

To explore business opportunities
 Investment in venture capital funds• We have been Investing in two VC funds since 2023
Energy & Environment Investment, Inc.
Real Tech Holdings Co., Ltd.

 R&D expenses: a total of ¥3.2 bil. for the 9th medium-term business plan
(4 years: FY2024-FY2027)(Ref.) Total amount for the 8th medium-term business plan ¥1.7 bil. (3 years: FY2021-FY2023)

In addition, we consider M&A and partnerships with other companies topromote new business expansion

 To collect information on ventures in the materials
and environmental fields
 To seek business opportunities through collaboration
with venture companies possessing advanced
technologies while utilizing our resources and knowhow

External Collaboration to Create New Businesses
Informationand needs

New products
and added value

Existing Customers

Results
and information

Outsourcing ofresearch

Universities andResearch Institutes

Technology
and information
Business modelResources
Network

Venture Companies© 2023 Nippon Denko Co., Ltd.

13

3-4. Target 2 - To Improve and Stabilize Profitability

Medium/Long-TermBusiness Strategies

We aim to achieve an ROE of 10% or higher by establishing a more stable and profitable structure through the active investment in growing
fields while further stabilizing profitability through the restructuring of the domestic Ferroalloys Business (drastically reducing the impact
of market and volume fluctuations)
Projection for FY2023(consolidated)：

Net sales
Ordinary profit

：

ROE

：

9th Medium-Term Business Plan for FY2027(consolidated)¥78.0 bil.

Net sales¥5.7 bil.

Ordinary profit

7%

ROE

(underlying profit basis*)

Underlying profit basis in FY2023"Our Ideal State" in 2030

Target for FY2027

 Ferroalloys

 Functional Materials
 Incineration Ash Recycling  Aqua Solutions

 Ferroalloys

 Electric Power  Others Electric Power  Others：(consolidated)

Approx. ¥95.0 bil.

：

Net sales

Ordinary profit ：Approx. ¥10.0 bil.

：

ROE

10%

Ordinary profit analyses (vs. FY23)

 Functional Materials
 Incineration Ash Recycling  Aqua Solutions（bil. yen）

5.0

：
：

Y

5.7

（bil. yen）

0.6

0.1
0.3
0.1

Profitimprovement（bil. yen）

13.0 or larger¥3.0 bil.

(4.9)

Major items

Cost
increase• Expansion of Incineration

Volumeincrease

Ash Recycling Business

2.1

Ordinary profit

Ordinary profit

vs. FY2027

Strategic
investment effect

3.2
3.5

10% or higher

Up more than

0.1
0.3
0.6

2.3

2.5

¥13.0 bil. or larger

Target for FY2030（bil. yen）

10.0

¥110.0 bil. or larger• Zirconium oxide

production enhancement• Effects of DX
FY2023

FY2027

Ordinary profit*Earnings excluding inventory impact and one-time factors© 2023 Nippon Denko Co., Ltd.

14

3-5. Target 3 - Financial Strategy

Medium/Long-TermBusiness Strategies

We aim to reform our financial structure to realize growth strategies and improve profitability

To reinforce non-current
assets as a source of profits

Appropriate
financial leverage

To strengthen non-current assets
through proactive strategic
investment

Net D/E ratio
0.20 → 0.30 to 0.45

To proactively return profit toshareholders

To boost the efficiency of
inventories

High level of shareholder returns
based on stable and high profitability

To improve the efficiency of
inventories and reduce the effects ofinventory through DX

Projection of BS at the end of FY2030

BS as of the end of September FY2023

Total assets: Approx. ¥150.0 bil.
Current assets

Total assets
Current assets

52%
Non-current assets

48%¥100.0 bil.
Liabilities

32%

Approx.

Expand by 1.5 times
through proactive
strategic investments

Non-current assets

Net assets

68%
Net D/E Ratio: 0.20

40%

Approx.

60%

Liabilities

Approx.

40%

Net assets

Approx.

60%

Net D/E Ratio: 0.30 to 0.45
© 2023 Nippon Denko Co., Ltd.

15

3-6. Target 4 - Sustainability-Related Measures – GX (1)Medium/Long-TermBusiness Strategies

To implement measures to achieve carbon neutrality and aim to reduce our CO2 emissions by 45% or more* in FY2030(*Scopes 1 and 2, vs. FY2015)

CO2 emission reduction target
FY2030

Reduce by 45% or more
(Scopes 1 and 2, vs. FY2015)

Measures for carbon neutrality

FY2050 Carbon neutrality▍ CO2 emissions of Nippon Denko Group (10 thousand tons/year)
Reduce by
61
77
45% or more
Scope2

Carbon neutrality

Scope1• Adoption of an internal carbon pricing system- Set an internal carbon price at ¥10,000/tons-CO2 (Scopes 1 and 2) ,promoting GX investment (From January 1, 2024)

 Manufacturing technology• Installation and upgrade of energy-saving equipment
FY2021(Actual)

FY2030(Target)

FY2050(Target)Direct emissions by Nippon Denko Group (mainly derived from the coal coke reduction
process in high-carbon ferromanganese manufacturing)＜Over 90% of Scope1 CO2 emissions derive from ferroalloy manufacturing＞

Scope2• Planning to invest around ¥5.0 bil. in GX by FY2030• Manufacturing high-carbon ferromanganese by using new reduction
technologies to replace coal coke with wood coke and hydrogen etc.

Scope1FY2015(Reference year)

 GX investment plan

Indirect emissions from the use of electricity and heat supplied from external sources• Improving the utilization rate of renewable energy

 Information disclosure• Participation in GX League (May 2023)• Acquired third-party assurance for our CO2 emissions(Scopes 1 and 2)© 2023 Nippon Denko Co., Ltd.

16

3-6. Target 4 - Sustainability-Related Measures – GX (2)Roadmap toward carbon neutrality
CO2 emission reduction target

Medium/Long-TermBusiness Strategies～FY2030

Reduce by 45% or more (vs. FY2015)

Developing carbon-free ferroalloy
manufacturing processes(wood coke, hydrogen, etc.)

Basic research and tests

Promotion of energy conservationin existing processes

Continuous reduction in CO2 emissions fromenergy consumption

Further utilization ofrenewable energy

Expansion of photovoltaic power generation
using idle land and plant buildings

Adoption of the latest
energy-related technologies～FY2050

Carbon neutrality
Verification test anddevelopment of actual
equipmentcommercialization

Adoption of well-verified CCUS, etc.

▍ Major initiatives in FY2023 Reduction mainly in Scope1 by FY2030
 Reduction test (performance assessment) of manganese ore

R&D on wood coke reduction

Great potential as an alternative to coal coke. Improvements in wood coke and technical enhancements during actual
furnace operation are the challenges
 Selected in FS research phase of the NEDO project involving the private sector in FY2030
Theme: Study on Carbon-Neutral Energy-Saving Technologies for Ferromanganese Manufacturing

Switching tovirtually CO2-free electricity

 Purchasing non-fossil certificates with FIT tracking
At the Koriyama Plant, there has been a transition to virtually 100% renewable electricity, including solar power generation© 2023 Nippon Denko Co., Ltd.

17

3-6. Target 4 - Sustainability-Related Measures – DX

Medium/Long-TermBusiness Strategies

To utilize data and digital technology to promote production, operations, and business. Plan to invest around ¥4.0 bil. by FY2030
Phase of the DX strategies

DX vision

 FY23 - FY26: Productivity improvement & operational efficiency improvement (Phase 1)

Realizing optimal manufacturing and creation of new value throughdigital transformation and self-innovation

Production DX

Visualization of production information, real-time sharing

Operation DX

Transformation of work styles and business processes by streamlining
operations
Visualization of supply chain information, and enhanced management

Business DX FY27 - FY30: Creating corporate value (Phase 2)

DX activity themes
Production DX

Promotion of smart factories to strengthen manufacturing competitivenessOperation DX

Concentrate resources in high value-added services by operational
efficiency improvement

Business DX

Optimal allocation of management resources and creation of new
businesses

DX platform andenvironment
Development of an autonomous organization to promote DX andits specialized human resources
A system to enhance productivity and business quality

Production DX

To reduce labor and optimize operations

Operation DX

Shifting from routine work to high-value-added work

Business DX

Advancement of business management and generation of business ideas

DX infrastructure & environment Human resource development• In FY2023, we started education for the improvement of DX literacy in all departments andlevels, and e-learning targeted at general employees• DX talent development required for more efficient and advanced operations
Target for FY2030: A total of 80 members; specifically, 40 DX promotion leaders and 40 data
scientists (About 10% of all employees)

 Improvement of system infrastructure• To revamp core systems (operation/accounting) and adopt purchasing management
systems© 2023 Nippon Denko Co., Ltd.

18

3-6. Target 4 - Sustainability-Related Measures– Human Capital Management

Medium/Long-TermBusiness Strategies

Visualizing and executing a human resource strategy linked with the medium/long-term business strategies will strengthen the foundation ofhuman capital management and improve corporate value(1) Conceptual diagram of our human resource strategy(2) Targets (visualization) and measures for human resource strategy

Establishment as corporate culture

Medium/long-term business strategies

TargetLinkage
Talent acquisition

Talent acquisition and creation of added value

Reducing the number of additional personnel
by promoting DX

Measures for humanresource strategy
Investment in human capital
Creation of added
value foremployees
Strengthening the foundation of human capital management• DE&I• Respect for humanrights• Diverse work styles• Well-being

External environment

Securing additional personnel in response to
growth strategies

Human resource strategy targets

Recruitment
DX promotion

Human resource strategy measures

To enhance
engagement

Strengthening thefoundation ofhuman capitalmanagement

・Decrease in the labor force
・Diverse work styles
・Labor market mobility

Contents
DX
promotion

Production DX, Operation DX,
Business DX

Careertrack
employees

Internship program
Establishment of a regional careertrack system

Skilledemployees

To improve regional presence(popularity)
Promotion of participation of female
employees in operational
departments and more

Qualities to carry out
growth strategies

Strategic management
capabilities
Innovation capabilities

・Innovation training, junior boards, executive candidate training, anddevelopment of self-driven personnel
・Participation in the venture collaboration study team, etc.

Specialized
capabilities for
growth strategies

DX talent, key qualified
personnel, advanced
researchers and foreign
talent・DX education, utilization of Off-JT and support for certification acquisition

Skills to adapt tobusinesstransformation

Multitasking skills

・Education for fostering multi-skilled workers, reskilling, and a flexible talent
portfolio
・Change of job category and a regional career-track system

・To promote diversity (promotion of participation of female employees in operational departments, cultivating female
managers, enhancing child-rearing support, etc.)
・Well-being management (building a secure and safe working environment, reviewing the in-house personnel system, etc.)© 2023 Nippon Denko Co., Ltd.

19

INDEX

1

Five Core Businesses

2

Review of
the 8th Medium-Term Business Plan
‐From the "Desired State" to "Our Ideal State"

3

Outline ofMedium/Long-Term Business Strategies‐Toward "Our Ideal State" in 2030
‐Providing Value to Stakeholders‐<Target 1> Growth Strategy‐<Target 2> To Improve and Stabilize Profitability‐<Target 3> Financial Strategy‐<Target 4> Sustainability-Related Measures

4

Medium/Long-Term Business Strategies ofFive Core Businesses© 2023 Nippon Denko Co., Ltd.

20

4. Five Business Strategies (1) <Ferroalloys (Domestic)>

Five Business
Strategies

Largest manganese ferroalloy supplier in Japan
Our mission <Solving social issues>
Stable supply of ferroalloys, indispensable for high-grade steel products, which isnecessary for the sustainable development of society
 Realization of carbon-free ferroalloys
Specific measures (9th Medium-Term Business Plan)

Direction of our medium/long-term business strategy <Enhancing corporate value>

Maintaining a stable earning structure by covering the decrease in domestic
crude steel production and the increase in costs for ferroalloy manufacturing
through productivity improvements, etc.
 Aiming to reduce our CO2 emissions by 45% or more by FY2030
[Market assumptions: Current market level]
Net sales

1. Establishment of high-carbon ferromanganese manufacturing system toincrease output from 180 thousand to 200 thousand tons/year• To increase production capacity by 10% (increase the ratio of in-houseproducts) by improving plant operation rate

Ordinary profit（bil. yen）

(bil. yen）

"Our
9th Medium-TermBusiness Plan Ideal State""Our
9th Medium-TermBusiness Plan Ideal State"

50.0

50.0

FY2023

FY2027
Target

2. Establishing a sustainable and stable supply system

2.5

2.5

FY2023
Underlying
profit basis

FY2027
Target• Diversification of routes for procuring resources and raw materials in
preparation for geopolitical risks• Procurement that takes into account social responsibilities such asenvironmental impact and respect for human rights

3. Development of a carbon-free ferroalloy manufacturing process• Shift from coal coke reduction to wood coke reduction• To promote the development of new technologies such as hydrogen reduction

FY2030Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

21

4. Five Business Strategies (1) <Ferroalloys (Domestic)>

Five Business
Strategies

To achieve a stable earning structure that is less susceptible to decreases in domestic crude steel production and market conditions forferroalloys
Structural
Reforms

High-carbon ferromanganese capacity(finished product basis : 240 thousand tons/year)

260 thousand tons/year (Tokushima Plant + Kashima Plant)(finished product basis : 240 thousand tons/year)（bil. yen/year）

8.0(1) Production integration:
180 thousand tons/year(finished product basis : 160 thousand
tons/year)

Production improvement: 200 thousand
tons/year)(finished product basis: 180 thousand tons/year)(2) Price formula revision（$/t）

Ordinary profit for domestic ferroalloys (excld. inventory profit or loss)

Without structural reforms
Outlook for earnings fluctuation range1200

Nominal margin (Product market price - Manganese ore market price (conversion to product price))¥(4.0) bil. to ¥6.0 bil.

After structural reforms
Outlook for earnings fluctuation range

6.0¥0.0 to ¥5.0 bil.

1000
800

4.0
Underlying profit basis

Improvement in
operation rate

2.0

400

0.0
Avoidance of
deficit risk

-2.0
-4.0

600

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

260

250

250

0

MTBP

Sales volume of high-carbon ferromanganese （thousand tons/year）

260

FY2027

200

250

200

230

210

200

200

The shortfall will be covered by external procurement© 2023 Nippon Denko Co., Ltd.

22

4. Five Business Strategies (1) <Ferroalloys (Overseas)>

Our ownership ratio(25%; direct investment)

PertamaKudumane (12%; indirect investment)

Five Business
Strategies

Global bases for green ferroalloy utilizing hydroelectric power
Strong supply chain by the ownership of manganese mine interests
Direction ofof
our MLTB
medium/long-termbusinessstrategy
corporateStrategy
value> >Direction
Strategy< Directionof <Enhancing
Long-Term BusinessOur mission <Solving social issues>
Pertama

Building a global supply chain for green ferroalloys

PertamaKudumane

Securing stable manganese procurement to support steel
production

Kudumane

Establishment of an optimal production system utilizing low-costgreen electricity
 To achieve profitability by expanding our transaction value andimproving productivity
 Maintaining and expanding our stakes in manganese resourcesSpecific measures (9th Medium-Term Business Plan)
To strengthen Pertama’s ferroalloy production system

Net sales• Establishment of an optimal production system to meet demand from customers(carbon neutrality, avoidance of geopolitical risks, high-grade ferroalloys, etc.)
required for the sustainable development of society

Our trading value of
Pertama product

Effect of reducing 840 thousand
tons-CO2/year(Source: Agency for Natural Resources and Energy, estimated based on our results)

Inclusion of our equity interest(bil. yen）

"Our
9th Medium-TermBusiness Plan Ideal State"

13.3

1.0

Prospective Location

Use of Inexpensive Green Power

Superiority of
Pertama
Ferroalloys

4.0
Pertama
Ferroalloys

compared to manufacturing with thermal power
generation
J-crediting (¥3,200 /t-CO2) conversion: ¥2.7 bil./year(bil. yen）

"Our
9th Medium-TermBusiness Plan Ideal State"

Pertama
Contributing to the reduction of CO2
emissions in ferroalloy manufacturing by
maximizing the use of green electricity

Ordinary profit

Utilization of electricity from the Bakun Dam
Hydropower Station in Sarawak, Malaysia, thelargest in Asia (2,400MW)

Adjacent to India and other
Asian countries, which are
expected to grow

(0.1)
FY2023

FY2027
Target

FY2030TargetFY2023
Underlying
profit basis

FY2027
Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

23

4. Five Business Strategies (2) <Functional Materials>

Five Business
Strategies

A lineup of high-performance, high-quality, distinctive materials, and domestically produced one-of-a-kind products in the Japanese market
based on our hard-earned metallurgical and powder technologies
Our mission <Solving social issues>
Contributing to carbon neutrality and the development of the mobility field Reducing geopolitical risks by providing domestically produced one-of-a-kindproducts in the Japanese market
 Contributing to the development of society by further developing highly functional
materials


Direction of our medium/long-term business strategy <Enhancing corporate value>

Expansion of production capacity in anticipation of increased demand due to thefurther electrification and digitalization of automobiles.
 Expansion of sales of domestically produced one-of-a-kind products in theJapanese market
 Development of new products using manufacturing technologies for electronicmaterials and battery materialsSpecific measures (9th Medium-Term Business Plan)
1. Expansion of zirconium oxide production

Net sales（bil. yen）

• 40% increase from existing production volume (scheduled to start operation in 2027)(bil. yen）

"Our
9th Medium-Term
Ideal
State"
Business Plan

"Our
9th Medium-Term
Ideal
State"
Business Plan

Responding the increased demand for MLCC* and battery materials due to the further*Multilayer ceramic capacitors
electrification and digitalization of automobiles

2. Expansion of domestic and overseas sales of high-value-added,
domestically produced one-of-a-kind products in the JapanesemarketOrdinary profit

3.2

18.0
14.0

2.1

• Domestically produced one-of-a-kind products in the Japanese market:
Ferroboron, boron oxide, and manganese carbonates

3. New product development through R&D• To enhance added value by developing high-performance zirconium oxide• To release new battery materials through development and mass production

FY2023

FY2027
Target

FY2030TargetFY2023
Underlying
profit basis

FY2027
Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

24

4. Five Business Strategies (2) <Functional Materials>

Five Business
Strategies

Market trends surrounding our products and our response
Markets

Advancementof mobility
fieldsApplications

Electrification anddigitalization of
automobiles

Our products

Market position(competition)

Zirconium oxide

Demand for battery material components increased due to the development of themobility field
In addition, demand for electronic components increased due to the development ofbattery control and advanced communication technologies and the use of electronic
components in automobiles

Strengthening production capacity(40% increase)

Ferroboron

Domestically produced one-of-akind product in the Japanesemarket(The sole manufacturer
excluding China)

Increase in demand for neodymium magnets due to the growth of demand for
motors for power generation

Expand domestic and overseas sales

Manganese carbonates

Domestically produced one-of-akind product in the JapanesemarketDemand for battery material components increased due to the development of themobility field
In addition, demand for electronic components increased due to the development ofbattery control and advanced communication technologies and the use of electronic
components in automobiles

Considering increasing production capacity

Cathode materials for lithium-ion
batteries

Several companies

Although the automotive battery market is expected to expand, the increase indomestic production is uncertain due to global production competition for secondary
batteries

Continuation of OEM(Considering increase depending on thesituation)

Metal hydride alloys

Several companies

For the time being, the demand for nickel hydrogen batteries for HVs remains
steadyContinuation of stable production

Domestically produced one-of-akind product in the JapanesemarketSlowdown from peak demand for telework-related products, but expected to remainunchanged due to the demand for larger displays

Continuation of stable production
Improvement of profitability－

Development and supply of high-performance, high-quality materials that support
the sophistication and miniaturization of electronic components thanks to increased
demand accompanying the development of advanced communication technologies

R&D
・Quality characteristics improvement－

Development and supply of new products with improved characteristics (higher
capacity, miniaturization, etc.) of battery materials as demand for a wide range of
secondary batteries expands in addition to those required for the electrification of
automobiles

R&D
・Development of next-generation
secondary battery materials

Glass panels

Boron oxide

Electronic components

High-performance zirconium
oxide

Battery materials

Our response

Domestically produced one-of-akind product in the Japanesemarket partly for specificapplications

Automotive battery

Solving
supply chain
challenges andstrengthening

Market trends

New battery materials© 2023 Nippon Denko Co., Ltd.

25

4. Five Business Strategies (3) <Incineration Ash Recycling>

Five Business
Strategies

Possessing the largest melting and solidification capacity in Japan
Perfect recycling of incineration ash (recovery of valuable metals + slag resource utilization)
Our mission <Solving social issues>

Direction of our medium/long-term business strategy <Enhancing corporate value>

Social infrastructure for a recycling-oriented society• Recycling through recovery of valuable metals (urban mining)• Coping with the shortage of landfill sites



Expanding processing capacity on a large scale through the promotion of therecycling of incineration ash by strengthening collaboration with municipalities
and local communities

Considering an absorption-type merger of Chuo Denki Kogyo Co., Ltd. (a wholly-owned subsidiary) in order to strengthen initiatives in thegrowth field of the Incineration Ash Recycling BusinessSpecific measures (9th Medium-Term Business Plan)
Reinforcement of incineration ash melting furnaces

Net sales• Gradually increase the number of incineration ash melting furnaces from No. 5 (scheduled to start
operation in 2027) to No. 7 (scheduled to start operation in 2030)
Social life

General waste

Waste
incineration plant

Incineration ash

Landfill sites（bil. yen）

Valuable
metals

Large-scale
reinforcement

Civil
engineering
materials

Incineration ash
melting furnace(Schematic diagram of resource recycling)(bil. yen）

"Our
9th Medium-TermBusiness Plan Ideal State""Our
9th Medium-TermBusiness Plan Ideal State"

70% increase from ourcurrent capacity

9.4

130 thousand
tons/year(Incineration ash melting
furnaces No. 1 to No. 4)

FY2023

Promotinga recycling-oriented society

Ordinary profit

FY2030220 thousand
tons/year(Incineration ash melting
furnaces No. 1 to No. 7)

2.3

5.0
0.6
0

FY2023

FY2027
Target

FY2030Target0

FY2023
Underlying
profit basis

FY2027
Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

26

4. Five Business Strategies (3) <Incineration Ash Recycling>

Five Business
Strategies(Nationwide) Amount of general waste incineration ash, and remaining capacity of landfill sites
Demand for resource utilization will increase as the remaining capacity of landfill sites for waste (incineration ash, etc.) will decrease in the future. We will contribute to
the creation of a recycling-oriented society through perfect recycling (recovery of valuable metals + slag resource utilization) by our technology for melting andsolidifying incineration ash

Nationwide general waste incineration ash volume & disposal status
Recovery of valuable
metals from urban mining(As of the end of FY2020)(Melting and solidification processing by private companies and municipalities)

Approx.

10% of the total

Nationwide disposal in landfill volume
4.5 mil. m3/year *2

mil.
tons/year
Domestic Consumption of Valuable Metals andEstimated Recovery from
Nationwide Incineration Ash (4.2 mil. tons/year)

Resource recovery(tons/year)(Melting and solidification,
conversion to cement, etc.)

1.4

mil.
tons/year

2020

0.1

NipponDenko

33%

Nationwide residual capacity of landfill sites

Gold

Palladium

Platinum

Nationwide
generation
amountDomestic consumption(Industrial use)

57

34

25

4.2 mil.

Amount contained inincineration ash (4.2 mil.
tons/year nationwide)

8

3

3

tons/year 2.8

mil.
tons/year *1

Source for domestic consumption: Survey of Precious Metals
Distribution by the Agency for Natural Resources and Energy
Amount contained in incineration ash is based on the estimates by
the company

Landfill disposal

67%

Remaining years of landfill sites
Approx. 22 years*2 Includes other than general waste
incineration ash in landfill(millions m3)

120
100

111

Increase demand forrecycling resources

100

80
60
40
Decrease in remaining
capacity of the landfill isforecasted in the future2002011 2015 2020

2030

2040

Source: Survey Results of Actual General Waste Disposal by the Ministry of the Environment*1 (Reference) Amount of disposal in landfill: Approx. 3.5 million m3/year© 2023 Nippon Denko Co., Ltd.

27

4. Five Business Strategies (4) <Aqua Solutions>Five Business
Strategies

Purification and reuse of wastewater, recycling through the adsorption-type recovery of valuables, and contribution to clean energy
Our mission <Solving social issues>
Contributing to a recycling-oriented society by purifying wastewater andrecovering valuable materials
 Contributing to the achievement of a hydrogen society by providing pure waterproduction systemDirection of our medium/long-term business strategy <Enhancing corporate value>

To expand business by developing new products in anticipation of new demandamid stricter regulations on wastewater To expand sales of pure water production systemSpecific measures (9th Medium-Term Business Plan)
1. Expansion of Wastewater Treatment Business

Net Sales• Capacity enhancement of boron-adsorption resin recycling and recovery facilities(scheduled to start operation in 2026)

Ordinary profit（bil. yen）

(bil. yen）

"Our
9th Medium-TermBusiness Plan Ideal State""Our
9th Medium-TermBusiness Plan Ideal State"– Increase in demand for the removal of boron contained in seeping water from landfill sites• Strengthening the lineup of impurities which can be removed from wastewater by R&D– Launch of new adsorbents (inorganic adsorbents) through development and mass production– New product development (capturing the demand for heavy metal recycling)

2. Expansion of sales of pure water production system

0.6

2.7
2.0
0.1

• To expand sales for hydrogen stations, methanation, etc.
• To expand sales for biomass power generation (applications: trial operation,
maintenance, etc.)

FY2023

FY2027
Target

FY2030TargetFY2023
Underlying
profit basis

FY2027
Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

28

4. Five Business Strategies (5) <Electric Power>

Five Business
Strategies

Stable supply of green electricity through the largest dam in the private sector
Our mission <Solving social issues>Contributing to carbon neutrality by stable supply of green electricity

Direction of our medium/long-term business strategy <Enhancing corporate value>

Creation of further value after FIT (after 2037) while utilizing a stable earning
structure by FIT

Specific measures (9th Medium-Term Business Plan)
Net sales

1. To improve the reliability of power generation facilities based on longterm plans

Ordinary profit（bil. yen）

(bil. yen）

• Steady execution of preventive maintenance• Measures to minimize damage during dam overflow caused by heavy rains"Our
9th Medium-TermBusiness Plan Ideal State""Our
9th Medium-TermBusiness Plan Ideal State"

2. Response to natural disasters
1.3

1.3
0.3

0.3

FY2023
Underlying
profit basis

FY2027
Target

3. Utilization of environmental value in hydropower generation• Leveraging our FIT non-fossil certificates with tracking, derived from our hydroelectric
power, we contribute to our company's overall carbon neutrality• Collection of information on renewable energy development projects such ashydroelectric power generation of other companies

FY2023

FY2027
Target

FY2030Target

FY2030Target© 2023 Nippon Denko Co., Ltd.

29

Summary of Medium/Long-Term Plan

Summary

1. Summary"Our Ideal State" in 2030

"A company on a constant quest for a better future by supporting people's lives
through materials and the environment"

Basic Policy

Balancing "Solving social issues through business activities" and "Enhancing
corporate value through sustainable growth"

Four Targets for Realizing"Our Ideal State"・Growth Strategy
・To Improve and Stabilize Profitability
・Financial Strategy
・Sustainability-Related Measures

2. Projections (consolidated)
Projection for FY2027(9th Medium-Term Business Plan)*1"Our Ideal State"
in 2030

Net sales¥95.0 bil.

¥110.0 bil. or larger

Ordinary profit¥10.0 bil.

¥13.0 bil. or larger

10%

10% or higher

ROE*1 9th Medium-Term Business Plan (FY2024 to FY2027), with FY2027 as the final year

(Ref.) Projection for FY2023¥78.0 bil.
¥2.5 bil.

Underlying profit basis*2: ¥5.7 bil.

4%

Underlying profit basis*2: 7%*2 Earnings excluding inventory impact and one-time factors© 2023 Nippon Denko Co., Ltd.

30

ZX
General Affairs Department, Nippon Denko Co., Ltd.
TEL
Website03-6860-6800
https://www.nippondenko.co.jp/en/

Disclaimer
This material is provided solely for informational purposes and does not constitute an offer to buy or sell our shares. Forecasts of performance and other information published in this material are based on
current information. No guarantee is presented or implied as to the accuracy of the information, which may contain various uncertainties. Actual performance results may differ from those projected in thisdocument. We will not be held liable for any losses incurred as a result of using this material.
This document has been translated from the Japanese original solely for the purpose of reference. If there is a discrepancy between this translated document and the Japanese original, the original shalltake precedence.