0\FRPPLWPHQW

3XUVXLQJ,QWHJUDWHG
7KLQNLQJEDVHG0DQDJHPHQW)XOILOOLQJRXUVRFLDOUHVSRQVLELOLW\DQG
FXOWLYDWLQJRXUEXVLQHVVWRKHOSVROYH
HQYLURQPHQWDODQGVRFLDOLVVXHVLQ
VROLGDULW\ZLWKRXUVWDNHKROGHUV
6XVWDLQDELOLW\LVQRWMXVWDWUHQGRUIDGEXWLVWKHVWUDWHJ\IRUVXUYLYDO%\WUDQVIRUPLQJRXUVHOYHVWKURXJKLQWHJUDWHGWKLQNLQJEDVHGPDQDJHPHQW0LWVXL.LQ]RNX*URXSZLOOEHUHVLOLHQWDJDLQVWQRWMXVWWKHFRURQDYLUXVFULVLVEXWDOVRDQ\SRVVLEOHIXWXUHFULVHVWƌĞƐŝĚĞŶƚ ĂŶĚ ZĞƉƌĞƐĞŶƚĂƚŝǀĞ ŝƌĞĐƚŽƌ

E/^,/<ĞŝũŝʽWƌŽĨŝůĞʾϭϵϴϬ:ŽŝŶĞĚDŝƚƐƵŝ<ŝŶǌŽŬƵϮϬϬϴ,ĞĂĚŽĨ&ŝŶĂŶĐĞĞƉĂƌƚŵĞŶƚϮϬϭϭŝƌĞĐƚŽƌĂŶĚŚŝĞĨ&ŝŶĂŶĐŝĂůKĨĨŝĐĞƌϮϬϭϰZĞƉƌĞƐĞŶƚĂƚŝǀĞŝƌĞĐƚŽƌĂŶĚ^ĞŶŝŽƌDĂŶĂŐŝŶŐŝƌĞĐƚŽƌϮϬϭϲ WƌĞƐŝĚĞŶƚĂŶĚZĞƉƌĞƐĞŶƚĂƚŝǀĞŝƌĞĐƚŽƌ

08

MITSUI KINZOKU Integrated Report 2020

0,768,.,1=2.8,QWHJUDWHG5HSRUW
MITSUI KINZOKU Integrated Report 2020

09

My commitment

I would first like to offer my sincere condolencesfor people who passed away from COVID-19, as
well as my heartfelt sympathy to everyone
affected by the infection. I would also like toexpress my gratitude and respect to the medical
staff and many other individuals who arecombating the spread of the infection.
The global economy in FY2019 had been
recovering moderately overall despite theconcerns about the adverse impact of U.S.–
China trade friction and the decelerating Chinese
economy until the outbreak of the pandemic in
2020, which put a brake on economic activities
and plunged the economy into rapid decline. The
future has become increasingly uncertain, andthe world is confronted with unprecedented
economic and social crises – coronavirus crisis.
Mitsui Kinzoku Group has also been affectedby the pandemic as the state of emergency wasdeclared in Japan and other countries in which
we operate. The impact on our businessactivities was significant particularly in China,Peru, Malaysia, India, the United States, andMexico due to shut-down of manufacturing sites.
We have taken emergency measures promptly
at our sites and in our supply chain to address
the crisis. We put the lives, health, and safety of
our employees and their families first and strive
for continuing our operations. I would like toexpress my deep appreciation to ourstakeholders, such as customers, suppliers andour employees, for understanding ouremergency measures and supporting us in
minimizing the impact on our business.
Business management integrated with sustainability

In the 2019 medium-term management plan (the19 Medium Plan), Mitsui Kinzoku Groupenvisages – by 2024, the year of the 150th
anniversary of its founding – to “be a corporategroup that continually creates and develops
growth products and businesses in our threecore business domains (Engineered Materials,Metals, and Automotive Components).”
10MITSUI KINZOKU Integrated Report 2020

To realize this vision for 2024, we have declared
our commitment to “Transformation for
Sustainable Growth,” which represents pursuingbusiness management integrated withsustainability or, in other words, integrated
thinking-based management.
For us, sustainability means sustainability notjust of Mitsui Kinzoku Group but also of society
and the earth. We, therefore, need to meet thetriple bottom line of economic, environmental,
and social sustainability.
In addition to the declaration, we also
published the Integrated Report 2019 andpresented an overall picture of how we canrealize the vision in our value creation process.
By a backcasting approach for the vision, weclarified the basic direction of the transformation
for sustainable growth through integrated
thinking-based management, as well as thespecific management strategy.
Our goal is clear; we will transform ourselves
into a company that continuously enhances itsvalue. We will achieve this goal with the strategy
built on the two pillars of business and social
responsibility: offering products and services
from our three core business domains, that willcontribute to solving environmental and social
issues, and endeavoring to minimize negative
impact (risks) of our business activities, which
could arise anywhere in our value chain in thelong term. While outputs from business profits(economic value) and from fulfilling social
responsibility will generate new corporate valueand help us realize our vision, they will also
generate social value in external environments.
Our social value should contribute to the United
Nations Sustainable Development Goals (SDGs),
particularly SDG 8 “Decent work and economicgrowth,” SDG 9 “Industry, innovation andinfrastructure,” SDG 12 “Responsibleconsumption and production,” and SDG 13“Climate action.”
Based on this management strategy, inFY2019, we implemented measures to develop
and expand sales of MicroThin™ and other 5Grelated products and catalysts for automobile

exhaust gases; recycle nonferrous metals; andadopt ICT for automotive components production
and site management. When it comes tomeasures to fulfill social responsibility, we
addressed material environmental, social andgovernance risks with high financial impact.
While we were making these efforts, however,
we had to revise down the FY2019 results andFY2020 targets set out in the 19 Medium Plan
due to the below-plan sales of our main products
and the impact of the pandemic. It is uncertain
when the pandemic will end, and we are facing
extreme difficulty in maneuvering the corporategroup get through this crisis.

positions, it can be said that they draw a closed
value chain loop where resources are circulated
from the arterial industry to the venous industry
and back to the arterial industry within the one
corporate group. This means we have a corecompetence in material cycling and the potential
to help realize a circular economy which is theworld’s ambitious challenge. We must fully
leverage this core competence to create growth
products and businesses that will help solve
environmental and social issues. This represents
the crux of our business model and what ourslogan “Material Intelligence” means. This is
Mitsui Kinzoku Group’s identity.

Big-picture perspective

Global issues and solidarity

Some say that the unexpected pandemic is
causing the greatest ever post-war global
recession. There is also an opinion that the‘SDGs boom’ is over and company management
is to focus on addressing the crisis with shortterm measures.
However, as President, I believe that, toovercome this crisis, it is more critical in business
management to take long-term measures basedon the essence of the company and issues ofevery level around the world. Therefore, the bigpicture perspective is indispensable for us inorder to reaffirm our Group’s identity which
remains unchanged regardless of the external
environment as well as underlying global issues.

While the pandemic hit the world hard, 2019 and2020 also saw many disasters likely caused byprogressing climate change. We may be facing acrisis in which climate change is intertwined withother issues in a complicated way. I feel thesense of crisis behind the SDGs; if humans
continue economic activities in the same way, it
will bring the earth to the brink of destruction. In
the coronavirus crisis, if companies only focus on
the pandemic issue of SDG 3 and think about
the trade-offs on the axis of confrontation
between health and the economy, they may
misjudge the intertwined underlying issues andfail to take correct actions. The SDGs raise
underlying global issues inclusively and they arelinked with each other. We need to examine andaddress the SDGs in an inclusive and integrated
manner.
The SDGs also require all stakeholders toparticipate and cooperate with each other. As theworld faces the pandemic, the word “solidarity” isattracting attention. Solidarity means uniting
efforts among different levels of society, rather
than conflict with each other, in order toovercome the crisis together. Based on this spiritof solidarity, ambitious initiatives such as“Recover Better” and “Green Recovery” havealso been launched.

Redefining our identity

Our business model positioned at the center ofour value creation process involves creatingproducts and services based on the six capitals.
This business model is sustained by our two
main strengths: Core technologies, such as
those for separation and purification, powder
control, and composite materials, and thediverse skilled employees who utilize thosetechnologies. With these strengths, the businessdomains operate in their respective positions invalue chains. When taking an overview of these

MITSUI KINZOKU Integrated Report 202011My commitment

What we can do NOW

Mitsui Kinzoku Group will advance its
transformation and take long-term measuresthrough integrated thinking-based management
to achieve our vision. We will examine andaddress global issues under the SDGs throughleveraging our identity and reinforcing solidarity
with our stakeholders by promoting market cocreation and engagement with them. By
considering changes of the external environment
due to the coronavirus crisis, we have revised
the measures taken under the management
strategy and come up with the following fourmeasures that we will be implementing NOW.
Firstly, we have revised risk management andthe material issues (materiality) related tosustainability. We started working on theimprovement of our risk management this April
and have identified, from an integrated
perspective, long- and short-term business risks
and business risks in an emergency withpotentially high financial impact. We also haverebuilt our risk management system that includes
actions against the identified risks, risk
assessment and results review. We will continue
to revise the risk management system in FY2020
as well.
We also have reviewed material issues related
to sustainability in accordance with ourmanagement strategy of business and socialresponsibility. More specifically, from among thelong-term environmental and social issues raisedby the SDGs and other initiatives, we haveselected those for which expectations are highamong our stakeholders for us and which pose ahigh financial risk to us. They were defined asmateriality that may provide us with long-termbusiness opportunities and cause long-termbusiness risks. With these revisions, we haveclarified the basic direction of our sustainability
initiatives and identified financial risks andopportunities.
Secondly, as part of our specific efforts for
SDG 13 “Climate action,” to which we aim tocontribute, we take part in the “Challenge Zero”
12MITSUI KINZOKU Integrated Report 2020

initiative by Keidanren (Japan BusinessFederation) and are currently tackling fourinnovation challenges. All these challenges takeadvantage of our core competence, i.e. ouridentity. Their objectives are to deliver
innovations to achieve the production of CO gas,a useful starting material, from CO2 gas;development of an all-solid-state battery forrenewable energy storage; better demand
response; and use of alternative fuels to coke inthe imperial smelting process. Whileendeavoring to mitigate climate change, we willbeef up our efforts toward a circular economy,
which will lead to achieving SDG 12“Responsible consumption and production.”
The third measure concerns SDG 8 “Decentwork and economic growth” and SDG 9 “Industry,innovation and infrastructure.” Because of thepandemic, the traditional business model in cities
where profits are generated from massconsumption by people who physically meet isbecoming ineffective. As structural and demandchanges occur in cities and urban innovation
advances, some experts forecast that 5G will be
the future infrastructure of massive innovations incities. The 5G-related market is therefore
expected to expand further, and we will reexamine our plans to make them more
responsive to demand mainly in the copper foil
and engineered powders businesses. We areworking to create new businesses with growth
opportunities and get them into the market.
We also expect that the current movement
toward the future mobility society will continue. In
the automotive components business, we makesure to respond to the new domains of CASE
(connected, autonomous/automated, shared,and electric). As urban innovations advance,base materials, which make up the structural
framework, will remain essential. In the metals
business, we will add copper smelting to theexisting lead, zinc, and precious metals smeltingand refining network to increase synergies andintensify recycling smelting.
Fourthly, we have placed the R&D and market
co-creation functions, which were formerly apart of the Engineered Materials Sector, under
corporate control by establishing the Business
Creation Sector in April this year. Our corecompetence supported by the two strengths ofcore technologies and employees and market
co-creation with stakeholders is the source ofabove-mentioned innovations. Our purpose
behind this transfer is to concentrate the twostrengths for business creation and to strengthen
collaboration with stakeholders. By solidifying thefoundation for business creation, we will
establish overwhelming core competence anddeepen our solidarity with stakeholders to create
innovations to address environmental and social
issues.
More resilient and sustainable in a crisis

The coronavirus crisis has been bringing asignificant change to our value chain and may
have a great impact on our business. At thesame time, as the crisis is also changing
traditional mindsets across all levels of society
around the world, we have been more pressedto put “Transforming Our World,” the core
principle of the SDGs, into action than everbefore. Now is the time the world should
implement drastic reforms to solve issues andachieve the SDGs by 2030.
Mitsui Kinzoku Group believes that, bytransforming ourselves through integrated
thinking-based management with a long-term
perspective based on global issues, we canmake the Group resilient against not just COVID19 pandemic but also any possible future crises.
Sustainability is not just a trend or fad but is thestrategy for survival. Whatever crisis may occur,
we will act together with our stakeholders withoutpandering to short-termism. We desire to be amore sustainable corporate group that cares for
all workers in our value chains, the earth, andfuture generations of people and all living things.

(July 2020)

MITSUI KINZOKU Integrated Report 202013