November 17, 2022

Financial Results Briefing Session for the Six Months Ended
September 30, 2022
Q&A (Summary)(Q1) Regarding the recovery from the electric furnace incident at Hachinohe, could
you tell us what the timeline is for the resumption of operation and fulloperation? What is your estimate for the impact on the production volume, andthe costs associated with the incident?
(A1) As explained on pages 10 and 14 of the Briefing Material, with regard to therestoration of the electric furnace that has been shut down due to the leakage
accident, we expect to have its production facilities itself restored to an operational
state by the end of the third quarter of this fiscal year (ending March 31, 2023).
The timing of the resumption of operations has been changed to the next fiscal year
(ending March 31, 2024) due to a shift in policy to strategic volume curtailment that
ensures a certain level of profitability. Normally, it would take about one and a halfmonths from the start of energization to full operation.
Currently, we are unable to provide information on costs related to the accident
because we have not yet received all the necessary information, but we expect thatits impact on this fiscal year's results will be minor, factoring in the payment coverageby the insurance provider.
The production volume after the resumption would be the same as that for thecurrent fiscal year (13,000 tons), assuming the current environment continues, but it
does depend on the environment.
We will promote measures to ensure profitability, such as cost reductions andoperational improvements, while working to quickly recover the production volume.

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(Q2) Could you update us on the competitive landscape for nickel pig iron (NPI)?
(A2) With regard to production volume, as shown on page 7 of the Briefing Material, thecombined NPI production volume in China and Indonesia in 2021 increased year onyear, with Indonesia's increase more than offsetting the decline in China, and thistrend is expected to remain unchanged in 2022.
Furthermore, given the sharp rise in ferronickel production costs due to the recent
surge in resource and energy prices, we have been forced to refer to the NPI price asa pricing indicator for ferronickel, making sales growth challenging.
Under these circumstances, it appears that Chinese NPI producers in Indonesia andKorean ferronickel producers are planning to convert NPI into nickel matte and nickel
sulfate, a raw material for LIB (lithium-ion battery) materials, which may curb
production of NPI as a stainless steel raw material.
In addition, the Indonesian President stated that the Indonesian government will
impose an export tax on some nickel products, and recently, information on export
tax formulas has been circulating, making the introduction of this tax more plausible.
If this materializes, it may have a significant impact on NPI exports from Indonesia
and could lead to a scenario involving a tightening of ferronickel and NPI supplies.
In this environment, we aim to recover and expand demand, and increase earnings
by proposing green products to customers through carbon neutrality efforts, which weare currently promoting, thereby differentiating our products from NPI in Indonesia
and other countries where environmental measures are not well developed.

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If the NPI export volume from Indonesia slows down, ferronickel and NPI producers
in other countries may turn to the Philippines to procure ores, but the impact of thisdemand increase is expected to be limited because those mines cannot significantly
increase their annual mining volume.

(Q6) Could you share your thoughts on how new HPAL Project operations inIndonesia and other Southeast Asian countries will impact the Company andits equity method affiliates?
(A6) Since the project aims to produce high-purity nickel, a raw material for LIB materials,
we do not expect it to have a direct impact on us.

4（Q7） I understand that you include NPI prices as a reference when calculating
ferronickel sales prices, but what percentage of customers do you apply suchprices to? And is there a possibility that this percentage will rise in the future?
(A7) We set price levels partially based on the NPI price as a reference, but since contract
details may differ depending on the customer, we will refrain from answering thisquestion.

(Q8） If you refer to NPI prices when calculating ferronickel sales prices, to whatextent would the sales price fall compared to when you refer to only LME nickel
prices?
(A8) The base of the price formula is the LME price, where the NPI price is also
incorporated in some cases as a reference. We will refrain from answering withregard to price range since contract details may differ depending on the customer.

(Q9) Is there room to pass on higher costs, such as electricity and coal prices?
Also, is there room to do more on your side such as reducing costs?
(A9) The base of the price formula is the LME price, where the NPI price has been
recently incorporated in some cases as a reference. With regard to passing on higherprices, it is difficult to directly pass on costs to customers, but we will maintain a close
dialogue with customers so that they can understand the quality of our products, thenwe will seek their understanding regarding our pricing.
Regarding room for cost reduction, we believe that there is much room for
operational improvement, which we have been working on to date. We also believethat there is room to reduce logistics costs by devising appropriate measures.

(Q10) Regarding CO2 emission reduction from ferronickel smelting, could you tell us
about your current efforts and your medium- to long-term approach todeveloping technologies to respond to this?
(A10) As shown on page 21 of the Briefing Material, we are promoting initiatives to reducegreenhouse gas (GHG) emissions. We are still in the research stage for the content
listed there, but we are also promoting fuel conversion and other measures.

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Although this is not directly related to the GHG emission reduction, as described on
page 20 of the Briefing Material, we are working to reduce overall GHG emissions byfocusing on recycling-related technologies and developing our resource-recyclingbusiness.
As for the target timing, we aim to reduce GHG emissions by 46% in FY2030
compared to FY2013.

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(Q11) On comparing the first and second half results of the year listed on page 13 of
the Briefing Material, although the sales environment seems worse in thesecond half of the year, is there a possibility of further curbing sales?
(A11) While our business performance has worsened due to a recent sudden change in theenvironment, we have set the optimal production and sales volume at approximately
13,000 tons per year to minimize losses to the greatest extent possible. Since this is
the optimal volume at this point, any further change in the volume may increase thecost burden. If the environment changes significantly in the future, we will flexibly
respond to such changes and consider changing the quantity accordingly.

(Q12) Regarding the increase in NPI production in Indonesia on page 7 of the Briefing
Material, does it include the NPI that has been converted to nickel matte andnickel sulfate?
(A12) The graph on page 7 of the Briefing Material shows data on NPI production volumeonly.

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