May 16, 2024

Financial Results Briefing for Fiscal Year Ended March 31, 2024
Q&A (Summary)(Q1) Could you tell us specifically what kind of strategy you have developed forrecovering revenues and returning to profitability?
(A1) With regard to our ferronickel production, the temporary rise in energy prices seems tohave calmed down, and while there will be a lag before this is reflected in the inventory
cycle and electricity fees, we expect an improvement in production costs due to thenormalization of energy prices. Nevertheless, there is a significant gap between
production costs for nickel pig iron (NPI) produced in Indonesia and our ferronickel. On
the other hand, for local NPI production in Indonesia, there are restrictions on
constructing new smelters due to the issue of ore resource quantities and rising raw
material costs to consider. Increasing environmental costs due to environmental
problems are also becoming an issue.
We produce ferronickel while meeting strict environmental standards. Furthermore, weare aiming to drive demand recovery and growth and to increase revenue by offeringgreen products to customers that address carbon neutrality requirements—forexample, since last year, we have been moving forward with researching anddeveloping the use of microwaves for the purpose of reducing fossil fuels in thecalcination process. We are currently working on this carbon neutrality measure which
will reduce coal consumption in our R&D. If we can reduce coal consumption, we will
also be able to reduce coal-derived impurities. By contributing significantly to thereduction of manufacturing costs, this will enable us to produce competitive products.
We are strongly pursuing the development of overseas business, the production of raw
materials for LIB materials, new metal smelting business based on seafloor resources,
and restructuring of our recycling business, which are priority measures in our Mediumterm Management Plan. By developing businesses that are less likely to be impacted
by changes in market conditions, we will create a stable revenue platform.

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(Q2) At present, a lot of your sales are to Japan, but are prices still linked to LME
nickel bullion prices as in the past? Or is cheap nickel pig iron impacting prices?
(A2) We refer in part to NPI prices when determining our price level, but since contract
details may differ depending on the customer, we will refrain from answering thisquestion. With regard to the earlier forecast about returning to a price level linked toLME, we believe that it will be difficult due to the growth of the NPI market, but goingforward, we expect that the difference between LME and NPI prices will become
smaller as stainless steel demand recovers due to factors such as the projected growthof the stainless steel market and improvement of the Chinese economy.

(Q3) Could you tell us about the impact of cost changes in the new fiscal
year for nickel ore, electricity, coal, etc.?
(A3) The price of nickel ore, which is a key raw material, and the price of raw fuel andelectricity are expected to remain at a high level. We do not see any changes in theenvironment in the fiscal year ending March 31, 2025, and we expect this will have amajor impact in terms of price.

(Q4) The only countries for which sales are forecast in the fiscal year ending March31, 2025, are Japan and Taiwan. Will this situation continue?
(A4) There are no changes in the current sales environment. There continues to be excess
supply due to increased production of Indonesian NPI, and the sales environment has
become markedly worse for various Fe-NI producers. Due to this environment, wehave decided to concentrate sales on Japan and Taiwan in the fiscal year ending
March 31, 2025. At the present time, we are not expecting any sudden improvementin the environment, so for the time being, we will maintain the volume reduction system
while taking profitability into account.

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(Q5) Could you tell us about the operating results forecast for the current fiscal year
if you were to stop nickel smelting in order to curb losses? Could you also
explain what the non-financial impact would be?
(A5) Fixed costs would be incurred, but since hypothetical information may be
misinterpreted, we will refrain from answering this question. Stopping production
operations with electric furnaces as a method of preventing increased losses only has
a temporary effect. Stopping and starting up an electric furnace requires a certain
amount of time in order to thoroughly check its condition while considering safety,
which incurs lost profit and incidental start-up expenses. We will implement substantial
volume reduction while the business environment is slumping, but we will avoid
stopping production.

(Q6) Are you considering withdrawing from nickel smelting in the future?
(A6) The nickel business is our core business. At the present time, there is no thought ofwithdrawing from it. As also explained in our latest IR materials, we are pursuing thecreation of new businesses that leverage the smelting technology we have developed
to date and also actively engaging in business areas other than the nickel business.
(Q7) From a medium-term perspective, could you tell us what means you will use torestore the company’s profitability besides new metal smelting projects?
(A7) In the nickel business, we are considering the production of green nickel, which
reduces GHG emissions, etc. We have been considering this for some time as an
initiative aligned with the global sustainability trend. To establish a stable revenue
platform, we will focus on creating new businesses that leverage our smelting
technology, and at the same time, we are moving forward with increasing added value
in our existing businesses.

(Q8) What is the amount of capital investment for new metal smelting projects?
(A8) We have concluded a memorandum of understanding with The Metals Company(TMC) and are currently in the process of considering capital investment. We expectthat capital investment in the Hachinohe Works will become clear once the final projectassessment is completed, so at present, we are not in a position to tell you an amount.
3(Q9) The sales volume for the fiscal year ending March 31, 2025, will be around thesame as the volume in the previous year and, in the forecast, both LME andforeign exchange rates are expected to be negative factors. Given this, could
you explain why your operating loss will decrease?
(A9) In the fiscal year ended March 31, 2024, there was a devaluation of inventory, but for
the fiscal year ending March 31, 2025, we formulated the plan based on theassumption that there will be a reversal of the inventory valuation due to factors suchas a decrease in inventory.
(Q10) In FY2024, you included around 3.6 billion yen of investment in overseas
business and resources. Could you tell us the purpose and effect of this?
(A10) This investment was planned in accordance with the priority measures indicated in thePAMCO-2024 Medium-term Management Plan. The purpose was to acquire partial
interest in overseas mining and smelting projects. The acquisition of mining interests
will lead to securing resources, while investment returns may be expected fromsmelting projects.

(Q11) With regard to the priority measures explained on page 20, could you tell us
about your capital policy, including any likely future investments?
(A11)The details explained in the priority measures are indispensable to our strategic growth,and we plan to pursue investment that prioritizes them. They will contribute toimproving our corporate value, and we believe they will also lead to shareholder returns.
With the aim of sustained growth investment, we aim to enhance and strengthen ourbusiness structure while maintaining our financial health. This includes sustainable
initiatives, and we intend to secure capital for investment in consultation with variousparties.

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(Q12) Could you tell us the purpose of registration as an electricity retailer on March29? And could you explain the impact that being an electricity retailer will haveon operating results?
(A12) We registered as an electricity retailer for the purpose of reducing costs by diversifying
our suppliers of electricity, which is a key energy source used by our company. Due tothis, it will be possible to procure electricity directly from electricity producers and theJapan Electric Power Exchange. For the time being, the purpose is to procure
electricity for our own use, but in the future we plan to consider supplying electricity toother nearby companies, etc. The impact on operating results depends on theelectricity procurement market, so we cannot necessarily calculate it, but we expectthat it will not only reduce electricity costs but also mitigate the impact that electricity
cost increases have had on our operating results until now.

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