Progress of Strategy by Business Segment:

Electronic & Advanced
Materials Growth businesses

Business Goal

*On April 1, 2023, the name waschanged to Electronic &Advanced Materials

Push forward with globalization and capture the top market share in
the high-purity and thermal management materials fields
supporting the miniaturization and stacking of semiconductors
電子・先端材料 Targets
Quantitative

Priority Measures

Net sales (billions of yen)

• Pursue aggressive expansion inoverseas markets• Develop new applications, expand
product portfolio• Produce high-quality products, pursue
microanalysis technology

Operating profit (billions of yen)

Net sales

150.0

Operating profit

25.0

20.5
100.0

91.5

103.0

102.0

50.0

7.2

9.0

10.0

7.0
5.0
0

FY2021
results

FY2022
results

FY2023
forecast

FY2025targets

SWOT Analysis• Superior quality in semiconductor-related products•D ifferentiation through such proprietary technologies
as reductive nitridation method (thermal management
materials) and direct hydration (IPA) ack of marketing strengths for global expansion
•L

S

•H
 igh market share in aluminum nitride powder

W

Strengths

Weaknesses

Opportunities

Threats• Growth in semiconductors due to increased
functionality of electronic devices, larger memory capacity,and electrification of vehicles

OT•E
 ntry of emerging manufacturers• Technological innovation in semiconductor market• Increased level of quality requirements from users associatedwith advancements in miniaturization and stacking

Progress by Product Area
Product Area
SiliconIC Chemicals

SilicaThermalManagement
Materials

FY2022 Results

TOKUYAMA REPORT 2023

Future Plans and Investments• Improve on quality control for semiconductor-grade
polycrystalline silicon• Enhance capacity for high-purity chlorosilanes andexpand in Asia
• Consider JV for polycrystalline silicon business in Malaysia•D evelop Taiwan JV supply structure for high-purity IPA for theelectronics industry
Establish JV in South Korea as a subsidiary for manufacturing
and sales of this product• Launch JV plant in South Korea for high-purity IPA for theelectronics industry• Investment enhancement of hydrophobic silica• FDA certification of silica, grades for food additives.

• Expand CASE* and personal care applications• Enter organic silicone field• Invest in facilities to study mass production of aluminum
nitride filler at the Center for Commercialization ofAdvanced Technology• Launch silicon nitride products• Expand sales of boron nitride• Develop new applications and enter downstream fields*Coatings, adhesives, sealants, elastomers

24

15.0

74.9

0

• Promotion of 5G and IoT, increased demand fordata centers

20.0

Tokuyama Value Creation

Tokuyama Value
Creation Strategy

Progress of Strategy
by Business Segment

Management for
Sustainable Growth

Corporate Data

Message from the Executive Officer in Charge

Responding with Technological Innovation to
the Semiconductor and Mobility Industries
Improving Our Market Presence

Executive Officer
General Manager, Electronic &Advanced Materials Business
Headquarters and Advanced
Materials Business Division

Katsumi Nagase

FY2022 Summary (results and issues)

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business Implementation

TI

he Electronic & Advanced Materials Business Headquarters
was reorganized into two divisions: the Electronic Materials
Business Division and the Advanced Materials Business Division,as of April 2023. In the Advanced Materials Business Division, we
manufacture and sell fumed silica used for the semiconductor
polishing (CMP*) slurries and silicone rubbers, thermal
management materials such as boron nitride and aluminum nitride,for some of which the Company has the world’s top market share.
We received U.S. Food and Drug Administration (FDA) certification
for silica and began customer evaluations for entry into the foodand personal care markets. This will result in expansion
applications, which is the priority measures in the Medium-Term
Management Plan. Responding to expansion of the market in
China for adhesives for wind-power generator blades and paintinks in China, Tokuyama Chemicals (Zhejiang) Co., Ltd. will boost
capacity for surface-treated hydrophobic silica, with operations set
to begin in FY2023. Thermal management materials are supported
by robust demand for semiconductor components, but the issues
confronting us will be to meet quality requirements for state-of-theart semiconductors and to increase our presence in the mobility
industry as it grows.

n July 2021, we finished construction of a facility at the Centerfor Commercialization of Advanced Technology to manufacture
silicon nitride used in thermal management applications, then in
2022 we finished construction of the mass production examination
facility for aluminum nitride filler. By undertaking thecommercialization of new thermal management materials in
addition to the existing aluminum nitride powder, we plan toprovide the market with wide variety of products having excellent
heat dissipation and high strength required for EVs, and otherpower semiconductors products, some of which has function tosignificantly improve thermal conductivity by blending filler withresin. The manufacturing process that we are currently testing formass production is made up of a number of component
processes. While evaluating each of these processes, we areworking every day to develop technologies to ensure the quality,
safety, and stable production that will satisfy our customers. Global
demand, in China and elsewhere, is more dynamic than we initially
expected. We will do our best to commercialize new products
early, since we naturally consider quality and building a future
supply structure to be issues that we must address.

*CMP: chemical mechanical polishing

Honing Our Technology and Adding Valueto Remain the Company of Choice Among
Semiconductor Industry Leaders
FY2022 Summary (results and issues)T

he Electronic Materials Business Division includes two
subsegments: Silicon and IC Chemicals. For the Silicon
subsegment, soaring coal prices and other factors have pushed up
the cost of electric power, significantly increasing manufacturingcosts. This has exposed us to a more difficult business environment
than we have ever experienced. However, by carefully explaining
our business environment to our customers, we were able to gain
their understanding and pass on the cost increases to our productpricing. For IC Chemicals, on the other hand, there has been major
growth in demand from the electronics industry for high-purity IPA
used in cleaning processes due to more miniaturization andlamination of semiconductor chips. We have therefore built a plantin Taiwan for integrated production starting with raw materials;
demand in Taiwan is the strongest worldwide, so we have put asystem in place to supply locally manufactured products to ourcustomers there. We have similarly started construction of a newplant in South Korea, where we plan to supply samples tocustomers from FY2023. Given that these products are all used instate-of-the-art semiconductor plants, the technical challenge we

Executive Officer
General Manager, Electronic
Business Materials Division

Seiji Teranishi

face is how to maintain a high degree of purity throughout allprocesses before the products are used by our customers.
Another challenge is working out how we can help ourcustomers recognize this value, so that this technical advantage
results in earnings as a growth business.

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business ImplementationThe semiconductor market will continue to enjoy solid growth.
However, the fact that this is such a growth market means thatcompetition over pricing and quality is intense. We must keep our
distance from price competition and pursue quality together withour customers, creating added value so that we can survive in thisgrowing market. Specifically, in order to meet customers’
requirements for high quality, we will continue to improve ourtechnologies for consistent production, quality control, andmicroanalysis, as we continually strive to be preferred by customers
who specify us for their purchases. Moreover, as we work to growsales in the Asian market, currently the most important“battleground,” we will also work on deploying into the US andEuropean markets, where growth is anticipated in the future.
TOKUYAMA REPORT 2023

25

Progress of Strategy by Business Segment:Life Science

Business Goal

Growth businesses

Use unique technology to capture top niche market share in areas
where differentiation is possible: vision, dental, and diagnostics

ライフサイエンス Targets
Quantitative

Priority Measures• Strengthen the marketing system and accelerate
expansion of production capability to further boost
market share of dental materials outside Japan• Develop new products and strengthen sales activities
to further expand the photochromic market
outside Japan• Strengthen the medical diagnostic systems businessNet sales (billions of yen)

Net sales

50.0

33.5

Operating profit (billions of yen)

Operating profit
37.5
7.3

25.0

46.0

10.0

40.0
7.5

8.0
5.0

6.0

0

0

FY2021
results

FY2022
results

FY2023
forecast

FY2025targets

SWOT Analysis• Unique product and technology development strengths
based on chemical technology• Able to swiftly respond to specific user requirements
through close coordination among sales,
manufacturing, and development

S

W

Strengths

Weaknesses

Opportunities

Threats• Growth of healthcare due to advent of super aging
society and heightened health awarenessO

T• Expansion of emerging markets in the Middle East,
Asia, and South America• Lack of marketing strengths and weak sales
system in overseas markets• Rise of emerging manufacturers centered on
South Korea and China• Destabilization of supply chain such as procuring
raw materials, outsourcing production overseas,and exporting product due to global instability

Progress by Product Area

26

Product Area

FY2022 Results

Future Plans and Investments

Fine Chemicals• Generic drug sales remained firm due to our strong reputation for
quality control• Global market share increased steadily due to strong performance ofphotochromic materials for eyewear lenses• Develop high-rarity APIs and strengthen
competitiveness• Develop new photochromic materials and enhancesales activities

Dental Materials
and Equipment• Tokuyama Dental Corporation began commercial operations of new
production line at the Kashima Factory• Composite resin business expanded worldwide due to increased
shipments to overseas markets and increased sales to Europe, the US,
and emerging countries• Sales of blocks for dental crowns increased• Further grow overseas market share by reinforcing
sales structure and accelerating improvements to the
supply system

Medical Diagnosis
Systems• Increased orders resulted in only slightly increased sales due to partsand materials shortages• Electrolytes for the Chinese market increased• Expand major product sales and earnings, whilestrengthening development of diagnostic reagentsTOKUYAMA REPORT 2023

Tokuyama Value
Creation Strategy

Tokuyama Value Creation

Progress of Strategy
by Business Segment

Management for
Sustainable Growth

Corporate Data

Message from the Executive Officer in Charge

Promoting DX, Strengthening Overseas Sales
Networks, Growing Earnings by Continually
Introducing New Products

Executive Officer
General Manager, Life
Science Business Division

Naoki Tamura

FY2022 Summary (results and issues)

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business ImplementationJW

apan’s declining birthrate and aging population are irreversible
trends. In order to compensate for the employee shortage thatwill result from the decrease in population, we have begun a DX
project at the Kashima Factory to ensure continued growth byincreasing production through plant automation.
In the dental materials and equipment subsegment, we begancommercial operations at the new expanded facility at the
Tokuyama Dental Corporation Kashima Factory, whereconstruction was completed in 2021, enabling us to make more
shipments to overseas customers. We have also been able tosteadily accelerate global sales of OMNICHROMA™ and othercomposite resins in Europe, the US, and emerging countries.
Although there was a delay in placing on the market resin blocks
for anterior teeth, these are now in full production.
Profit rose in the fine chemicals subsegment due to strong
sales of APIs and intermediates for generic drugs. Partly due toinventory buildup by generic drugmakers, orders remained strong
with favorable evaluations of our quality control. There was a
year-on-year decline in sales of photochromic materials foreyeglass lenses in this sector, partly due to inventory adjustments.
Nonetheless, the growth of our worldwide market share forphotochromic lenses has grown steadily along with thedevelopment of next-generation products.
For medical diagnosis systems, a shortage of parts andmaterials was among the factors that forced us to delay somedeliveries, but the subsidiary that A&T Corporation established in
China is now in full operation, helping to grow our sales to China.
Rising raw material and fuel prices, as well as a lockdown at the
Shanghai plant, made it a tough year for the microporous films
used in the backing sheets of disposable diapers and other items,
but we continued taking action, including developing
environmentally friendly products.

e will continue to develop DX systems for extended
production, reinforce our overseas network, and introduce
new products and services in order to continue transforming ourbusiness portfolio.
In the and equipment business subsegment, Tokuyama Dental
Corporation has decided to follow up on the production expansion
begun in 2021 by constructing a new facility on the Kashima
Factory aiming for completion in October 2024. When reorganizing
our European sales network, Tokuyama Dental Corporation plans
to make the joint venture Tokuyama Dental Deutschland GmbH
into a wholly owned subsidiary, in this way increasing the numberof expatriate employees in Europe. The sales plan is geared toward
more growth for our market share by resuming presentations at
exhibitions and more effective advertising as the impact of the
COVID-19 pandemic subsides.
For eyeglass lens photochromic materials, we will continue tofocus on developing new products in response to customer
requirements and changes in the market. For sales in this industry
sector, we intend to steadily improve shipment volumes, especiallyto overseas customers. In FY2022, we took on as a subsidiary
ASM Inc., a materials venture company with origins at the Universityof Tokyo, aiming to create new products in the materials field.
In the medical diagnosis systems business subsegment, we
are working to boost major product sales at A&T Corporation and,as we aim to increase earnings, we will capitalize on our Tsukuba
Second Research Laboratory to focus on developing medical
diagnostic reagents.

Market Environment
Map showing the relative sizes of global markets for dental materials and equipment
Europe and the United States make up 70% of the worldwide
market for dental materials and equipment, with North America
North America

being the largest market. In Brazil and other emerging countries,

Europe
China

Japan

Middle East
Central and South America

while the global market is expected to grow at a CAGR of
approximately 6%* until 2030.

Southeast Asia
Australia

Our Group is seizing this opportunity for market growth andaggressively intensifying our sales channels.
*Source: Estimate by Tokuyama based on Global Medical Device Market (May 2017),
Japan External Trade Organization (JETRO)

Stable market
Growth market

Circle size: market size

market growth continues in line with increasing per capita GDP,

Color: growth potential

TOKUYAMA REPORT 2023

27

Progress of Strategy by Business Segment:

Eco BusinessBusiness Goal

Growth businesses

Serve as a new business pillar for the future

環境
Quantitative Targets

Priority Measures• Respond to expanded demand for water treatment
membranes due to strengthened
environmental regulations• Expand resource recycling business in waste gypsum
board, photovoltaic panels and others• Commercialize developed next-generationenergy technologies

Net sales (billions of yen)

Operating profit (billions of yen)

Net sales

20.0

Operating profit

18.0

5.0
4.0

15.0

13.8
10.3

10.0

3.0

8.0

5.0

1.5

2.0
1.0

0

(0.4)
FY2021
results

00

FY2022
results

FY2023
forecast0(1.0)

FY2025targets

SWOT Analysis• Unique technologies such as continuous large
recrystallization technology for gypsum• Weak synergies among businesses• Ion-exchange membrane water treatment• Unique technologies, such as PV panel recycling
using thermal decomposition treatments

S• Decreased competitiveness due to risingenergy costs

W

Strengths

Weaknesses

Opportunities

Threats• Increased wastewater treatment demand due totougher environmental regulations in China andemerging countries

OT• Growing global environmental consciousness• Global awareness for creating a recycling-oriented society• Rise of emerging manufacturers centeredin China• Appearance and practical implementation ofalternative technologies

Progress by Product Area
Product Area

Environment

Ion-Exchange
Membranes

28

TOKUYAMA REPORT 2023

FY2022 Results• Waste gypsum board recycling: Construction began on thethird domestic site in Muroran City, Hokkaido

Future Plans and Investments• Waste gypsum board recycling: Ensure stable operation at
three factories in Japan and secure earnings and profits• PV (photovoltaic) panel recycling: Improved recycling quality
and completed process automation• PV panel recycling: Conduct demonstration testing forcontinuous operation to establish mass production technology
and business model• Completed large plant for Asian market•E xplore environment-related demand, such as the recovery ofvaluable resource and decarbonization

Tokuyama Value
Creation Strategy

Tokuyama Value Creation

Management for
Sustainable Growth

Progress of Strategy
by Business Segment

Corporate Data

Message from the Managing Executive Officer in Charge
Director, Managing
Executive Officer
General Manager,
Eco Business Division

Increased Environmental Awarenessas an Opportunity to Commercialize
Distinctive Technologies

Tomohiro Inoue
operability and design. Given the extremely high evaluations
received from customers for this product, the investment ratio of
our partner, Panasonic Corporation, was changed in July 2023 toboost product development and sales of the NS50.
Since FY2019, solar panel recycling technology has beendeveloped in the town of Nanporo (Sorachi District) in Hokkaido incollaboration with NEDO,* and a treatment process wasestablished in FY2022. Our public announcement of these results
met with strong interest and high expectations both from Japanand overseas. In FY2023, we will carry out a continuous operation
demonstration test as we work on establishing this technology formass production, as well as a business model.

FY2022 Summary (results and issues)B

oth revenue and profit in this division increased in FY2022
compared with FY2021.
ASTOM Corporation achieved major improvements in bothrevenue and profit by meeting new large-volume demand from theuse of specialized membranes with distinctive characteristics torecover a valuable resource lithium (Li). There were also firm
demand for ion-exchange membranes used in the production ofsalt, foods, and potable water. Since strong demand is expectedin the future for these applications, both in Japan and overseas, aswell as strong demand for continual technology improvements, wewill not miss out on the opportunity to develop this technology
even further as well as starting work on improving and refining our
supply system.
Tokuyama Chiyoda Gypsum Co., Ltd., a company withtechnology for completely recycling waste gypsum board into theraw material for gypsum board, achieved major growth in revenue
since a plant was operating near maximum capacity. The decision
was made to capitalize on these circumstances, the untapped areaof gypsum board recovery, by moving ahead with a third plant in
Muroran City, Hokkaido, Japan, where operations are scheduled
to open in the fall of 2023. However, the achievement of thiscompany did not meet earnings targets, due to higher processing
costs resulting from an unprecedented surge in resource prices
triggered by Russia’s invasion of Ukraine. While this company isfacing a harsh business climate, we will secure earnings and stable
operations at our three locations as we go ahead with several
initiatives, including revising our prices.
Plastic window sash manufacturer Excel Shanon Corporation
has announced the rollout of Shannon Wind NS50, a new productthat vastly improves on existing performance, excelling at*NEDO: New Energy and Industrial Technology Development Organization

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business ImplementationAs we look at the five-year period of our Medium-Term
Management Plan, although we see some progress in each of
our business subsegments, it is evident that we have not yet beenable to meet internal and external expectations in Tokuyama’s
three growth business domains: electronics, healthcare, and theenvironment. Although every one of our businesses has technicaland business challenges that must be overcome, we see the valueof each business subsegment increasing in the future amid
continued strong market growth and the high value andexpectations that our customers continue to place on our
technology. We will grasp this opportunity, refine our technologies,
help form a sustainable society through the commercialization ofenvironmentally friendly technologies, and pursue our goal ofestablishing new businesses for the future in FY2025, the final yearof our Medium-Term Management Plan.

Market Environment

Anticipated Volume for PV1 Panel Waste Disposal
In Japan, the start of the FIT system2 propelled the accelerated
adoption of solar power generation, while renewable energy
policies are driving this expansion in other countries around theworld. At the same time, massive quantities of used panels arealso expected to emerge, amounting to a forecast global disposal
volume of at least 1.7 million tonnes by 2030, rising to 60 million
tonnes by 2050.

In order to build up a circular system for solar power
generation, it will be necessary to prepare for the coming era ofmass disposal by establishing PV panel recycling technology thatis sustainable
1 PV: photovoltaic panels for converting sunlight into electricity
2 FIT system: A feed-in tariff for renewable energy

電子
・先端材料
Cumulative
global PV module waste disposal (estimated)
Cumulative PV module waste (million t)

Regular-loss scenario

Early-loss scenario

Cumulative PV capacity (GW)

Cumulative PV capacity

80

5,000
4,000

60

3,000

40

2,000

20

1,000
0

0

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

*Source: Status of PV Module Recycling in Selected IEA PVPS Task12 Countries 2022

TOKUYAMA REPORT 2023

29

Progress of Strategy by Business Segment:

Chemicals

Business Goal

Traditional businesses

Ensure stable earnings in the existing business

化粧品
Quantitative
Targets

Priority Measures• Strengthening the Chloro-alkali and PVC chain to
maximize profits• Reduction of CO2 emissions and waste through thedevelopment and introduction of world-class energyefficient electrolyzers and manufacturing
process improvements• Improve manufacturing processes and supply chainsthrough promoting DX

Net sales (billions of yen)

Operating profit (billions of yen)

Net sales

150.0

14.2

Operating profit

12.5

10.0

85.0

6.8
50.0

5.0

0

0

FY2021
results

FY2022
results

FY2023
forecast

FY2025targets

SWOT Analysis• Weak sales network overseas• Only domestic manufacturer of soda ash• Electrolyzer unit, electrolysis and manufacturing
technology with extensive operating record• Spread of fuel cell vehicles and promotion ofhydrogen society• Sales volume of calcium chloride for antifreeze
fluctuates depending on weather conditions

S

W• Coal-based private power generation

Strengths

Weaknesses

Opportunities

ThreatsO• Increase in demand for caustic soda and PVC resin
due to economic growth in Southeast Asia and India

T• Decreasing domestic demand due to Japanese
economic recession, customers relocating
overseas, etc.
• Easing supply and demand balance due to tohigher production at competitors using expanded
electrolysis and vinyl chloride production plants• Impact of continued high raw material prices
associated with the Russian invasion of Ukraine

Progress by Product Area
Product Area30

FY2022 Results

Soda Ash andCalcium Chloride• Maintained competitiveness by establishing a stablesupply system

Chlor-Alkali andVinyl Chloride•S trengthen Group partnerships, with Shin Dai-Ichi Vinyl
Corporation as a wholly owned subsidiaryTOKUYAMA REPORT 2023

15.0

116.2

101.4

100.0

14.5

128.0

Future Plans and Investments•M aintain and update facilities needed for stablebusiness continuity• Advance energy savings and rationalization to addressenvironmental issues

Tokuyama Value Creation

Tokuyama Value
Creation Strategy

Progress of Strategy
by Business Segment

Management for
Sustainable Growth

Corporate Data

Message from the Managing Executive Officer in Charge

A Stronger PVC Business with Shin Dai-Ichi Vinyl
Corporation as a Wholly Owned Subsidiary
Focusing on Keeping Product Supply and Quality Stable
FY2022 Summary (results and issues)F

iscal 2022 was a tough year for our chemicals segment, withsoaring coal prices due to Russia’s invasion of Ukraine andeconomic stagnation resulting from China’s zero-COVID policy. We
asked our customers to allow price adjustments in response to
sharp increases in the prices of raw materials and fuel as well as
logistics costs, then having gained their understanding we havebeen working to ensure a stable supply. Although the businessenvironment is expected to remain uncertain in FY2023, I intend toengage in dialogues with our customers to work through theissues. Since we are the only manufacturer in Japan of soda ash
and calcium chloride, it is particularly important for us to maintainthe supply and quality. We will continue to work hard to provide acontinuous supply. Also, to reach our goal of a 30% reduction in
GHG emissions by FY2030, we are currently studying ways toinnovate for more environmentally sustainable manufacturing
processes in the Chemicals Business Division. In FY2023, welaunched the SCM Visualization Project as part of our promotion of
DX in the Chemicals Business Division. Through this project, we
will thoroughly review all existing operations and redesign tasks
that are overly dependent on personal skills, which I hope will leadto greater efficiency.

TopicsManaging Executive Officer
General Manager,
Chemicals Business Division

Hirotaka Nishihara

Also in FY2023, we will strive to provide a consistent supply to
our customers by placing the highest priority on safety and stable
operations. In addition, I prefer to think of the trend toward carbon
neutrality as a business opportunity and to make this a year whenthe entire Chemicals Business Division builds environmentallyfriendly manufacturing processes.

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business ImplementationW

ith the cooperation of Sumitomo Chemical Co., Ltd., wemade Shin Dai-Ichi Vinyl Corporation into a wholly owned
subsidiary as of April 1, 2023. We reached this decision because
vinyl chloride is one of the most important items in our chlor-alkali
and vinyl chloride sector, and changing our approach in this way
enables us to accelerate our decision-making. Although making
vinyl chloride paste will be outsourced to Sumitomo Chemical’s
Ehime Plant beginning in FY2023, the supply to customers willcontinue as before with no change. The customers of our paste
business are primarily domestic manufacturers of wallpaper andflooring materials, as well as automotive-related processing
manufacturers. We will maintain the system that allows us toalways manufacture products sought by our customers and we willcontinue to sell the products that our customers prefer.

Contribute to Mitigation of Global Warming
Japan’s first domestic joint feasibility study of the social implementation of
circular carbon methanol utilizing CO2

In July 2023, Tokuyama began a feasibility study with Mitsubishi
CO2 as a chemical raw material. We are also considering using theGas Chemical Company, Inc. for the production and sale ofexisting methanol supply network of Mitsubishi Gas Chemical tomethanol using as raw materials the CO2 emitted from theserve customers who require environmentally circular chemicals.
Tokuyama Factory and hydrogen (H2) generated from caustic soda
Our aims in conducting this study are to help create a market
production, by applying Mitsubishi Gas Chemical’s proprietaryfor green products made in Japan and the social implementation
methanol production technology. Through this study, we are alsoof a CCU* industry by helping to instantiate low-carbon value andlooking at using the green electricity produced when biomass fuels
environmentally circular value, in order to promote the spread ofare fed into in-house power generation facilities to produce
environmentally friendly green products.
hydrogen, which can then be used as a methanol feedstock.
*CCU: carbon capture and utilization is the process of capturing carbon dioxide (CO2) to berecycled for further usage
Methanol is a base material for various chemical products, andas it can be produced from CO2, a greenhouse gas, it is expected
to be a powerful resource for building a carbon neutral society
H2through carbon capture and utilization (CCU*).
In-house consumption
HydrogenThe methanol produced through this initiative deserves theby Tokuyama
Methanoldescription environmentally circular. The commercialization of thesynthesis/
CH OH
results of this study will lead to the establishment of Japan’s first
CO2
distillationcommercial plant to recycle CO2 emitted from factories to produce
CO2 capture
Exhaust gas ofMethanolmethanol. At Tokuyama, our concept is to achieve the “greening”
facilities
power generation
External salesof chemicals through this circular carbon methanol method utilizing
facilities, etc.
3

TOKUYAMA REPORT 2023

31

Progress of Strategy by Business Segment:

CementBusiness Goal

Traditional businesses

Become the domestic industry leader in energy efficiency

Priority Measures

セメント
Quantitative Targets• Introduce energy-saving equipment to
reduce CO2 emissions• Reduce the amount of coal usage by
accepting more fuel-based wastematerials such as waste plastic

Net sales (billions of yen)

Operating profit (billions of yen)

Net sales

100.0

50.3

50.0

Operating profit

15.0

69.0

58.5

10.0

56.0

6.0

5.0

5.0
0

0

(1.9)
FY2021
results(3.7)
FY2022
results(5.0)

FY2023
forecast

FY2025targets

SWOT Analysis• Contribute to environmental preservation by accepting
waste from inside and outside the Company for cement
feedstock and as a thermal energy alternative• Enabling technological development from a chemical
standpoint based on chemical manufacturing• Domestic demand due to national resilience andLinear Chuo Shinkansen, Osaka/Kansai Expo andan IR,* etc.

• Higher of repair costs due to aging of facilities

S

W

Strengths

Weaknesses

Opportunities

ThreatsO

T• Demand for building infrastructure associated witheconomic development in emerging countries*IR: integrated resort• Decrease in domestic cement demand due todecline in population• Rising material and logistics costs• Criticism of cement industry due to problems with
CO2 emissions

Progress by Product Area
Product Area

FY2022 Results

Future Plans and Investments• Raising selling prices
Cement• Cutting manufacturing costs by using low-grade coal andincreased use of waste plastics/tires• Decision on sales subsidiaries merger

Recycling

32

TOKUYAMA REPORT 2023

• Consideration of suspending operations of a cement kiln
• Maintain and update facilities needed for stablebusiness continuity• More collection of waste plastics, etc.

• Advance energy saving and rationalization to addressenvironmental issues•S tart of a concrete dome silo operation for the consistent supplyof raw materials for cement• Expand waste treatment that contributes to aclosed-loop societyTokuyama Value Creation

Tokuyama Value
Creation Strategy

Management for
Sustainable Growth

Progress of Strategy
by Business Segment

Corporate Data

Message from the Managing Executive Officer in Charge
Managing Executive Officer
General Manager,
Cement Business Division

Initiatives to reduce costs and increase
selling prices

Takahide Taniguchi

FY2022 Summary (results and issues)

Progress on Medium-Term Management Plan 2025
Priority Measures and Future Business ImplementationOA

ur cement segment faced a tough environment due tosoaring coal prices, even higher than the levels they havebeen at since 2021, caused by Russia’s invasion of Ukraine. We
worked enthusiastically on both cost cutting and raising our selling
prices, our most urgent challenges. From early 2022, in order toimprove profitability, we used more waste plastics as an alternativefuel as well as low calorific value coals, which are difficult to handle,
while starting to increase selling prices. Although our efforts haveachieved limited results, operating profit fell for the second quarterin a row because of significant cost increases.
We invested in loading facilities for soil stabilizing cement at
the Osaka cement terminal, readying our system to meet growing
demand in the Kansai region for projects such as EXPO 2025
Kansai, Osaka, Japan and an integrated resort project. As well, we
merged four sales subsidiaries. These measures strengthened oursales network and management efficiency.

Topicss priority measures for our business target of being thedomestic industry leader in energy efficiency, we will focus on
introducing equipment that is energy efficient and that reduces
CO2 emissions as we cut coal consumption by using morealternative fuels, such as waste plastic.
For our specific initiatives to achieve our targets, in FY2023 wewill install high-efficiency clinker cooler bag-filters (converted fromelectrostatic precipitators) and tanks for new waste liquids. In
addition, we have been boosting the use of waste plastics and tirederived fuel.
Further, we invested in a concrete dome silo in FY2022 toconsistently secure alternative raw materials for cement.Because
the domestic demand for cement remains on a gradual downtrend,
to optimize production and match up our systems with the external
environment, we are considering into suspending the operation of
one cement kiln.

Contribute to Mitigation of Global Warming

Joint research toward effective utilization of biomass combustion ash and realization of CCS1
Disposal of fly ash emitted from biomass power plants, which havebeen increasing in recent years amid the trend toward eliminating
fossil fuels, has become an issue because this ash contains
elements such as potassium that restrict its reuse in cement. We
have been working since 2020 to develop technology for theeffective use of fly ash, including CO2 fixation. This technology will
be applied to a construction material sold by Itochu Enex Co., Ltd.
affiliate Kano FA Co., Ltd. (trademark: Recycle Beads™2) todevelop a new CO2-fixing admixture that enables biomass-derived
fly ash to be used effectively and for CCS to be more widely used.
By using fly ash that has been made to absorb CO2 with ourtechnology as a raw material for Recycle Beads™, and by effecting
further CO2 absorption during the production of Recycle Beads,™
we utilize them as CO2-fixing Recycle Beads™.
Initial studies performed by both companies have shown that
CO2 can be adsorbed into the calcium oxide contained in fly ash
and Recycle Beads™ to fix a greater amount of CO2 than isemitted during the production of Recycle Beads™. We willcontinue research for enabling the adsorption and fixation of more

CO2 at a lower cost as we move toward the goal of developing
construction materials that adsorb more than 10% of the total
amount of CO2 in our products.
1 CCS (carbon dioxide capture and storage)
2 Recycle Beads is a roadbed material and weed control product produced by KANOU FA
Co., Ltd., a company in which ITOCHU ENEX Co., Ltd. has a 49% stake.

Biomass power plant

Biomass fuel

KANOU FA CO., LTD.
Processing treatment

Combustion ash

Itochu Enex Co., Ltd.

Distribution

Recycle Beads

CO2 binding
treatment

Reutilization• Road subgrade material• Laid on a parking lot• Weed suppression material• Construction backfill material

TOKUYAMA REPORT 2023

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