5713

Daiwa Investment Conference Tokyo 20172015 3-Year Business Planand Its Progress
Aiming to be a World Leader in the Non-Ferrous Metals Industry
and an Excellent Company of Japan-Stage 2March 2017

Yoshiaki Nakazato
President and Representative Director
SUMITOMO METAL MINING CO., LTD.

Contents

Ⅰ Business Overview
Ⅱ 2015 3-Yr Business Plan and Current Progress
Ⅲ

Supplemental Materials (1) (Status of achievement of
individual strategies)

Ⅳ Supplemental Materials (2) (ESG initiatives / data)

SUMITOMO METAL MINING CO., LTD.

2

I. Business Overview

Ⅰ Business Overview
Ⅱ 2015 3-Yr Business Plan and Current Progress
Ⅲ

Supplemental Materials (1) (Status of achievement of
individual strategies)

Ⅳ Supplemental Materials (2) (ESG initiatives / data)

SUMITOMO METAL MINING CO., LTD.

3

1) Business Overview: Company Information

Ⅰ

Business Overview

Sumitomo Metal Mining Co., Ltd.
Founded

1590

Incorporated

1950

Paid-In Capital¥93.2 billion

Net Sales¥855.4 billion (FY 2015)

Recurring
Profit- ¥12.8 billion (FY 2015)

Number of
Employees

8,734 (consolidated) (FY2015)

Operations

Mining, smelting and refining, manufacturing of semiconductor andadvanced materials, and other operations(As of March 31, 2016)

SUMITOMO METAL MINING CO., LTD.

4

2) Business Overview: Timeline (1)Ⅰ

400 Years of History—Sumitomo’s Copper Smelting

Business Overview

Founded in 1590
Our roots date back to Soga Riemon’s copper smelting and smithing business.
Nanban-buki
The establishmentof the advanced
smelting
technology“nanban-buki”
that separated
silver from crude
copper, using
knowhow acquired
from abroad, wasattributed to
Soga Riemon.

Copper Wire Bars
Copper wire bars,
known as “Japan
Copper,” wererefined and castin Osaka andexported from
Nagasaki.

SUMITOMO METAL MINING CO., LTD.

5Ⅰ2) Business Overview: Timeline (2)Business Overview

Sumitomo's Business Spirit
Article 1
Sumitomo shall achieve strength and prosperity by placing prime importance on integrity and soundmanagement in the conduct of its business.
Article 2
Sumitomo shall manage its activities with foresight and flexibility in order to cope effectively with thechanging times. Under no circumstances, however, shall it pursue easy gains or act imprudently.

1590
Soga Riemon opened a copper smelting
and smithing business in Kyoto

1500s

1600s

1700s

1691
Operation of Besshi Copper Mine
started

1800s
Modernizationof mines

The Besshi Copper Mine underpinned Sumitomo’s operations for 280 years.
SUMITOMO METAL MINING CO., LTD.

6Ⅰ2) Business Overview: Timeline (3)1960 onward

Diversification of management

Worsening of businessconditions and closings atdomestic mines

September 30, 1999

Business Overview

Entry into new businesses(Electronics materials, catalysts, construction materials,
nuclear engineering, etc.)

JCO criticality accident occurs

2000 onward
2005

Corporate revitalization plan
Selection and concentration;
strengthening of corporate constitution
Production began at Coral Bay Nickel Corporation(Philippines)

2005

Capital investment in Cerro Verde Copper Mine (Peru)

2006

Operations began at Pogo Gold Mine (USA)2013

Production began at Taganito HPAL Nickel Corporation

2015

Commercial production began at Sierra Gorda Copper Mine (Chile)

2016

Acquisition of additional interest in the Morenci Copper Mine (USA)(Philippines)

Return to corebusiness

2000

Taganito HPAL Nickel
Corporation (THPAL),
Philippines

7Ⅰ3) SMM’s Mines and Smelters / Refineries

Business Overview

Mineral Resources
segment

Smelting & Refining
segment

CopperCopperGold

NickelOther

Other major sites, affiliates

Besshi-Niihama District Div.
Harima Nickel
Refinery(SMM's interest in parentheses)

Toyo Smelter & Refinery

Pogo（85.0％）

Niihama Nickel Refinery
Shisaka Smelting Co., Ltd.（100%）

Hishikari
Mine

Hyuga Smelting Co., Ltd. (60%)

Morenci（25.0％）
Jinlong Copper Co., Ltd.
（27.1％）
Coral Bay Nickel
Corporation（54.0％）

Nickel Asia Corporation（26.0％）
Taganito HPAL Nickel Corporation（75.0％）
Sorowako（20.1％）

Figesbal （25.5％）

Cerro Verde（16.8％）
Sierra Gorda（31.5％）
Ojos del Salado（16.0％）

Northparkes（13.3％）

Candelaria（16.0％）SUMITOMO METAL MINING CO., LTD.

8

4) Business Strategy:

Ⅰ

Business Model—3 Core Businesses

Business Overview

Mineral Resources
Business

Smelting & Refining
Business

Materials Business

Developing andmining resources

Extracting metals
from ore

Producing cutting-edge
electronic and advanced
materials

Cerro Verde
Copper Mine
(Peru; Copper)

Hishikari Mine
(Kagoshima, Japan;
Gold)

Copper ore

Gold ore

Taganito HPAL
Nickel Corporation(Philippines; Nickel)

Electrolytic
nickelToyo Smelter &Refinery (Ehime,
Japan; Copper, gold,
etc.)

Electrolytic
copperGold

Isoura Plant(Ehime, Japan;
batteries, etc.)

Sumiko Kunitomi Denshi
Co., Ltd.
(Hokkaido, Japan;
crystals)

Lithium nickel oxide(for battery materials)

LT/LN crystals(for SAW filters, etc.)

SUMITOMO METAL MINING CO., LTD.

9

Ⅱ. 2015 3-Yr Business Plan and Current Progress

Ⅰ Business Overview
Ⅱ 2015 3-Yr Business Plan and Current Progress
Supplemental Materials (1) (Status of achievement of

Ⅲ individual strategies)

Ⅳ Supplemental Materials (2) (ESG initiatives / data)

SUMITOMO METAL MINING CO., LTD.

10Ⅱ1) SMM's Long-Term Vision2015 3-Yr Business
Plan and Current
Progress

Aiming to be a World Leader in the Non-Ferrous Metals Industry
and an Excellent Company of Japan

TARGE
T
Targets

World Leader in the Non-Ferrous Metals Industry

FY2021
Nickel150 ktCopper interests

Excellent Company of JapanNet Sales¥1 trillion

300 ktGold

New materials

30 t

Recurring profit

Net Income*¥100 billion(Recurring profit ¥150 billion)¥5 billion• Grow steadily to achieve on our Long-Term Vision• Reconsideration of strategy based on external business environment changes* Profit attributable to owners of parent
SUMITOMO METAL MINING CO., LTD.

11Ⅱ2) Positioning of the 15 3-Yr Business Plan

Positioning of the 15 3-Yr Business Plan
towards long-term vision achievement
Large Scale Mineral Resources/Smelting & Refining
projects mostly completed in 2012 3-Yr Business Plan

Sowing seeds and planting towards further growth in the
15 3-Yr Business Plan

2015 3-Yr Business
Plan and Current
Progress

Long-Term Vision
Become a World Leader
in the Non-Ferrous Metals Industry
and an Excellent Company of Japan

3rd HPAL
Sierra Gorda
Oxide ores / Expansion at low Capex

Acquisition of new gold interest
Exploration activities
Expanded production ofbattery materials
New materials products
Changes in the externalbusiness environment
09 & 12 3-Yr Plans
03 & 06 3-Yr Plans
Move toward growth strategies
Become major player in nonferrous metals industry
Achieve world top share in each ofmaterial business productPromote Long-Term Visionoriented growth strategies
in the three core businesses

15 3-Yr Plan
Respond to external environment changes(Promote strategies focused on cost/investment
benefit)
Prepare for future growth
Grow materials business as core business

SUMITOMO METAL MINING CO., LTD.

12Ⅱ3) Initiatives Towards Long-Term Vision

Cu Annual Production Interest

Ni Annual Production Capacity
2015 3-Yr Plankt

280 kt300
200

2015 3-Yr Plan

Target300 kt

250 kt

kt

50

0

0
2013 2014 2015 2016 2018
(F)

2021

Materials Business Recurring Profit
2015 3-Yr Plant

Target
30 t

30
16 t

90 kt

2013 2014 2015 2016 2018
(F)

2021

Au Annual Production

120 kt

100 kt100

170 ktTarget150 kt

150

100

20

2015 3-Yr Business
Plan and Current
Progress

15 t

15 t

10
0
2013 2014 2015 2016 2018
(F)

2021

Recurring profit(JPY100M)

250
200
150
100
50
0

2015 3-Yr Plan

Target¥20.0 B
¥11.0 B

New products¥5.0 B¥6.0 B

2013 2014 2015 2016 2018(F)
SUMITOMO METAL MINING CO., LTD.

2021
13

Ⅱ

4) Nonferrous Metals Demand and Markets in 2017
Price ($/t)

12,00010,000

Copper market
LME在庫
LME inventory

COMEX inventory
COMEX在庫SHFE在庫SHFE inventory

LME price
LME価格

Inventory (kt)

6,000

900

4,000

600

2,000

300

0

Gold market

2,000

1,000
500
0

15

Au

LME inventory
LME在庫

Ni価格
Ni price

600,000
500,000
400,000
300,000

10

200,000

50

Price ($/Toz)

1,500

20

1,500
1,200

Inventory (t)SHFE inventory
SHFE在庫

1,800

8,000

Ni market

Price ($/lb)
25

2015 3-Yr Business
Plan and Current
Progress

100,0000(¥/$)
130.000Exchange market($/EUR)
1.70

120.001.60

110.001.50

100.00

1.40

90.00

1.30

80.00
70.00

1.20
¥/$
$/EUR

60.00

1.10
1.00

Without expectation of significant increase in demand, we cannot expect a significant rise in the market
Major mineral resource companies are escaping their worst period, and damaged financial constitutions are gradually
improving
SUMITOMO METAL MINING CO., LTD.

14Ⅱ5) Model of SMM Group's Response to Societal Needs

2015 3-Yr Business
Plan and Current
Progress

Project partners

MineralResources

SMM's manufacturing ability

Smelting andRefining

Technological ability

Business partners

Market needs

・Establishment of competitive advantage
・Business structure matched to competitiveenvironment

Materials

Development ability

One-stop-service provision of products

Key customers

Customers who lead the market
Social issues →Technological innovation→

Formation and expansion of new markets

From response to market needs specific to each business, toward bringing
the 3 Core Businesses together as one to meet key needs
SUMITOMO METAL MINING CO., LTD.

15Ⅱ6) The Changing Business Environment

2015 3-Yr Business
Plan and Current
Progress

1. Expansion of mine development costs
Increase in projects that cannot be addressed through conventional processes and scales ofinvestment
1) Higher, deeper, and more remote locations of mines2) Handling of declining ore grade and difficult-to-process ores (impurities)
3) Environmental measures4) Human resource shortages in resource-producing countries due to increase in development
projects
5) Higher hurdles to acquisition of social license to operate

2. Emergence of mineral resource nationalism
Acceleration of introduction in basic industry due to increasing depletion of mineral resourcesand declining ore grade
Mineral resource nationalism movements are ramping up due to mineral resource priceinflation
Indonesia
Philippines

New Caledonia
Chile, Peru, etc.

Impacts of shift of mining interests from COW to IUP, move to strengthen capital
restrictions, prohibition of copper concentrates exports at the Grasberg Copper Mine
Strengthening of environmental and community impact management, consideration ofmining interest royalties
Announcement of environmental audit final results on February 2, 2017; order to closeand suspend nickel mines equivalent to about half the Philippines‘ ore production
volumeMove to introduce royalties, nickel fundMove to strengthen tax collection; occurrence of strike at Escondida Copper Mine (Chile)
SUMITOMO METAL MINING CO., LTD.

16Ⅱ7) Financial Situation of Resource Producers

The size of the sphere and numbers in ( ) are total market value (Billion US$)2015 data is as of Jan. 15, 2016; 2012 and data is as of Jan. 7, 2013
Financial values and market capitalization in 2016 data are as of the end of the listed year/monthInterest-bearing debt
(billion US$)

Company managing
with debt leverage→increase total assets→decreasing in total market value
due to drop in price of resources

40

2015 3-Yr Business
Plan and Current
Progress

BHP
2016/6(72)Vale
2016/9(27)BHP
2015/6(52)Vale
2015/9(11)

Rio Tinto
2015/6(45)20

FCX
2015/9(4)FCX

Rio Tinto

2016/12(18)BHP

2016/12(72)Vale

2013/6(155)

Rio Tinto

2012/12(84)2012/12(86)SMM
2016/3(8)SMM
2012(6)

FCX
SMM

2012/12(26)2015/9(6)

0
0

20

40

60

Regarding 2015 and 2012–2013 data,
BHP Billiton/RioTinto, Glencore's financial numbers are as of June end, 2012 and 2015.
Numbers for the others are as of September end, 2012 and 2015.

80

100

120

140
Total assets (billion US$)SUMITOMO METAL MINING CO., LTD.

17

8) Top priorities in 3 Core Businesses and Initiatives in FY 2017

Ⅱ2015 3-Yr Business
Plan and Current
Progress

Mineral Resources Business・Full-scale production at the Sierra Gorda
Copper Mine・Early achievement of stable full-scale production
・Steady promotion of cost reductions

Smelting & Refining Business
・CBCN Declining ore grade trend
Mineral Resources Business

Capacity: 24 kt/yr. → current 22 kt/year

・Expansion of Taganito HPAL

Current 30 kt/yr. → 36 kt/yr. in 2017 latter half

・Securing of profits through stable operation
・Development of scandium recovery and otherperipheral technologies aimed at further growth・Expansion aimed at construction of Ni 150 kt
structure

Materials Business・Profit contribution from battery materials
1,850 t/mo. → 3,550 t/mo.

・Conversion of growth investments into strategic
capability and profits

In FY2017, steady execution of growth strategies and creation of a platform for further growth
SUMITOMO METAL MINING CO., LTD.

18Ⅱ9) Course toward Long-Term Issues (1)2015 3-Yr Business
Plan and Current
Progress

Overview of impairment loss at Sierra Gorda Copper Mine・On project basis, impairment loss is about -$2B
→ Impairment of about -30% of total fixed assets(about -10% impairment of fixed assets in previous FY)・Long-term copper price assumption:
Lowered from previous $7,000/t → $6,500/t
・Future expansion: From roughly doubled expanded investment, toreview of expansion plans, based on improvements to existing equipment
・SMM recorded an impairment loss of ¥79.9B as a non-operating expense(FY 2016 3Q)・About 60% of total fixed assets of project remains, combined with impairment in
the previous FY.

Full-scale operation at an earlier stage → achievement of cash neutral operation
SUMITOMO METAL MINING CO., LTD.

19Ⅱ10) Course toward Long-Term Issues (2)2015 3-Yr Business
Plan and Current
Progress

New expansion in the Materials BusinessTraces of business restructuring/ Decisions and announcements from the 2012 3-Yr Business Plan (FY 2013 onward)
・Sep 2013 NCA (lithium nickel oxide) expansion
300 t/mo. → 850 t/mo.
・Dec 2013 Withdrawal from COF (chip-on-film) business・Oct 2014 NCA expansion
850 t/mo. → 1,850 t/mo.
・Dec 2014
・Mar 2015
・Mar 2015
・Feb 2016
・Oct 2016
・Nov 2016

LT/LN (lithium tantalate/lithium niobate) substrate expansion
120 k units/mo. → 210 k units/mo.
Withdrawal from sapphire substrate business
LT/LN substrate expansion
210 k units/mo. → 300 k units/mo.
LT/LN substrate expansion
300 k units/mo. → 400 k units/mo.
NCA expansion
1,850 t/mo. → 3,550 t/mo.
Withdrawal from LF (lead frame) business
Relative market share

Corporate-led business restructuring is completed.
Next, SMM will execute "selection and concentration" in business units,
while maintaining focus on the environment, energy, and communications fields
SUMITOMO METAL MINING CO., LTD.

20Ⅱ11) Course toward Long-Term Issues (3)2015 3-Yr Business
Plan and Current
Progress

The Expense for Preparations for the Decommissioningof Facilities Owned by JCO Co., Ltd.

JCO Co., Ltd., a consolidated subsidiary of the Company, is preparing for thedecommissioning by dismantlement and decontamination of its facilities.

SUMITOMO METAL MINING CO., LTD.

21Ⅱ12) Course toward Long-Term Issues (4)2015 3-Yr Business
Plan and Current
Progress

Rebuilding of manufacturing capability
Issues at present
Mineral Resources Business・Sierra Gorda Copper
Mine operation

Smelting & Refining Business・Equipment trouble at
Taganito HPAL, etc.
・Decline in ore grade
・Measures to combat
impurities

Materials Business・Delay in converting
expanded investments into
strategic strength(construction of quality
structure, etc.)

Efforts aimed at minimizing and avoiding opportunity losses
Continuously achieving stable production, early launch of strategic investments,
and improvement of stable performance is vital
Realization of issues at present

Return to roots and rebuilding of manufacturing capability
SUMITOMO METAL MINING CO., LTD.

22Ⅱ13) Major Projects in 2015 3-Yr Business Plan

Materials

Smelting & Refining

Mineral Resources

Project name

Cu

Sierra Gorda Copper Mine

Cu

Morenci Copper Mine

Cu

Cerro Verde Copper Mine

Ni

SolomonNi

Taganito HPAL

Ni

Pomalaa Project

Ni

Harima Refinery
Nickel sulfate

Battery materials
Crystal materials (LT/LN)

FY 2015
Start commercial
production
Start expanded full-scale
production

FY 20162015 3-Yr Business
Plan and Current
Progress

FY 2017 onward
Phase 2: project toincrease production

110 kt production
structure
Acquisition of additional interests(12%→25％)
Start expanded full-scale
production

2018〜
Consideration of operation
start
Latter half of 2017
36 kt production structure

Conduct FS

Decision on
investment

Second line launch2018
NCA 3,550 t
structureNCA
1,850 t structure
Decision on
production
increase

300k pieces
production
structure

Ternary type
Increase production

2017
400k pieces production structure

SUMITOMO METAL MINING CO., LTD.

2314）Segment ProfitⅡ2015 3-Yr Business
Plan and Current
Progress

JPY 100M

2,000
1,500
1,000

Diff. Adjustment

500

Others0

Materials-500

Smelting & Refining-1,000Mineral Resources

2011

2012

2011

2012

2013
2013

2014
2014

2015
2015

2016
Forecast

2016
Forecast

15 3-Yr2018

15 3-Yr2018

JPY 100M
Price conditions

806

652

691

538

-443

-540

660

Smelting &Refining

256

339

291

813

253

350

800

Cu ($/T)

5,046

6,000

Materials

-3

38

111

129

60

110

200

Ni ($/lb)

4.6

7.0

Others

34

16

16

-1

-8

-10

-20

Au ($/Toz)

1,241

1,150

Diff. Adjustment

-5

105

35

263

10

100

60

Exchange

108.7

120.0

1,088

1,150

1,144

1,742

-128

10

1,700

Segment Profit

MineralResources

Total(Recurring profit)

2016
Forecast(¥/$)

SUMITOMO METAL MINING CO., LTD.

15 3-Yr
2018

24

Ⅱ

15) Capital Expenditure2015 3-Yr Business
Plan and Current
Progress(¥100 million)

15 3-Yr Plan

FY2015 Plan

FY2016 Plan

(May)

(November)(Total of 3 Years)

R&D,
Other

170

R&D,
Other

MineralResources

36

360

610

¥1,800
JPY
100M

253

MineralResources

67

¥589
JPY
100M

Smelting& Refining

Materials

MineralResources

41

232

660
Materials

R&D,
Other

Smelting &Refining

206

51

¥482
JPY
100M

Materials

184

Smelting &Refining

Acquisition of overseas interest

Acquisition of overseas interest

Acquisition of overseas interest(Morenci, 1,200 (JPY100M))(Morenci, 1,100 (JPY100M))(Morenci, 1,120 (JPY100M))

SUMITOMO METAL MINING CO., LTD.

25

Ⅲ. Supplemental Materials (1) / Status of achievement of individual strategies

Ⅰ Business Overview
Ⅱ 2015 3-Yr Business Plan and Current Progress
Ⅲ

Supplemental Materials (1) (Status of achievement of
individual strategies)

Ⅳ Supplemental Materials (2) (ESG initiatives / data)

SUMITOMO METAL MINING CO., LTD.

26

1) Mineral Resources

Ⅲ(1) Stable Production and Cost Reduction at the Sierra Gorda Copper Mine

Supplemental Materials
Status of achievementof individual strategies

Sierra Gorda Copper Mine (Chile)
Equityinterest
ratio

KGHM
SMM
Sumitomo Corp.

55%
31.5%
13.5%

Initiatives for FY 2017
Establishing stable operations for Phase I

kt
200・Promoting mutual understanding among shareholders and take part in local
management of project company

Cu Production (100%)・Production volume: FY2015 86 kt → FY2016 94 kt (forecast)

Cost reductions
・Continuing reduction of subcontracting costs and review of contracts, and aim for cash 100
neutral operation

Review of Life of Mine (operation plan) / impairment loss
・Unable to decide on implementation of Phase2 at current stage. Consideration ofchange to plan that aims for a certain increased production

0

2013

2014

・Recording of ¥79.9 billion impairment loss as a non-operating expense in FY 2016 3Q

SUMITOMO METAL MINING CO., LTD.

2015

2016
(F)

15 3-Yr
Avg.

271) Mineral Resources

Ⅲ(2) Cu : Stable Operation of Existing Mine : Morenci, Cerro VerdeMorenci Copper Mine (Arizona, US)
Equityinterest
ratio

FCX
SMM
Sumitomo Corp.

72％
25％
3%

Supplemental Materials
Status of achievementof individual strategies

Cerro Verde Copper Mine (Peru)
Equityinterest
ratio

FCX
SMM
Sumitomo Corp.
Other

53.56%
16.80%
4.20%
25.44%• May 31: Acquisition of additional 13% interest completed• Expansion PJ, March 2016: Transition to full-operation structure• FY2015 483 kt → FY2016 496 kt (forecast)• FY2015 247 kt → FY2016 502 kt (forecast)kt

Cu Production (100%)

600 kt
400

400

200

200

0

0

2013

2014

2015

Cu Production (100%)

600

2016 (F)

2013

2014

2015

2016 (F)Concentration on stable production and cost reduction
Toward a structure able to fully benefit from expansion effects
SUMITOMO METAL MINING CO., LTD.

28

1) Mineral ResourcesⅢ(3) Au : Stable Operation of Existing Mine : Hishikari, Pogo

Hishikari Mine (Kagoshima, Japan)
Equityinterest ratio

SMM

Status of achievementof individual strategies

Pogo Gold Mine (Alaska, US)
SMM
Sumitomo Corp.

Equityinterest ratio

100%

Supplemental Materials• FY 2016: Expected to achieve annual plan (6 t)• Development of lower ore bodies: Steady progress• 2015 year-end reserves: 169 t (JIS standard)

85%
15%

• FY 2016: Decrease in production volume due todecline in ore quality and actual yield• 2015 year-end reserves Reserve 62 t
Resource 83 t
(Canadian standards)

Au Production

t

10.0

12.5

Au Production (100%)

t

10.0

7.5

7.5

5.0

5.0

2.5

2.5

0.0

2013

2014

2015

2016 (F)

0.0
2013

2014

2015

2016 (F)

Initiatives aimed at extension of mine life andcontinuation of stable production
SUMITOMO METAL MINING CO., LTD.

29

1) Mineral Resources (4) Promotion of Exploration Activities /Ⅲ

Acquisition of Interests in Favorable Projects

Supplemental Materials
Status of achievementof individual strategies

Exploration activities Currently expanding activities with focus on Canada,
Australia, and South America

Establishment of new Business Development Team
Establishment of dedicated team for uncovering and evaluating gold development projects
Expansion of information-gathering antenna and greater speed of gold development project evaluation
Expansion of gold production volume through collaboration with the world's medium producers
Efforts to uncover gold development projects that leverage SMM's technological capabilities and that will truly contribute tostrengthening our management foundations

Exploration costs
By stage

By metal
60

60
40

Other
Other
Greenfield
新鉱床

20
0

Au composition ratio¥100 million¥100 million

exploration

80%
60%

40

40%

20

20%

周辺探鉱
Exploration
2013

2014

2015

2016
予想
(F)

around existing 0
mines

2013

2014

2015

2016
予想
(F)

0%

Au
Ni
C
Au%

Engage in exploration and acquisition of interests, with gold as the main target
SUMITOMO METAL MINING CO., LTD.

30

2) Smelting & Refining

Ⅲ(1) Strengthening Competitiveness in Copper Smelting (1)Supplemental Materials
Status of achievementof individual strategies

Toyo Smelter & Refinery production plan
Production volume
FY 2016 plan: 445 kt
FY 2016 forecast: 451 kt; Expected to achieve record
production volume
$/t
125

100

TC/RC (benchmark)TC($/t)RC(￠/lb)

12.5
10

75

7.5

50

5

25

2.5

0

0
2011 2012 2013 2014 2015 2016 2017 ￠/lb

E-Cu Production

Kt

500
400
300
200
100

0

2013

2014

2015

2016 (F)

Benefit from TC/RC increase through full and stableproduction under 450 kt structure
SUMITOMO METAL MINING CO., LTD.

31

2) Smelting & Refining

Ⅲ(1) Strengthening Competitiveness in Copper Smelting (2)Supplemental Materials
Status of achievementof individual strategies

Toyo Smelter & Refinery
Strengthening cost competitiveness
Further improve operational technology
Strengthen impurity-handling capability
Enhance secondary raw material pickup

Current
collecting
shipments ofsecondary raw
materials arestrongIncrease processingof profitable raw
materials and cut
costs to further
improve profitability
as world-leading
Copper Smelter

Index
2013=1.0

Enhance expanded pickup of
secondary raw materials

1.50
1.00
0.50
0.00

2013

2014

2015 2016 (F) 15 3-Yr
2018

SUMITOMO METAL MINING CO., LTD.

32

2) Smelting & Refining

Ⅲ(2) Toward a 150,000 Ton Structure for Nickel (1)NickelSupplemental Materials
Status of achievementof individual strategies

Material flow and raw material environment

Electrolytic nickel/ Nickel sulfate

CBNC
THPAL

Harima Refinery

Nickel sulfate(Philippines)

PT. ValeIndonesia(Indonesia)

Ferro-nickel

Other externalpurchase

Electrolytic Nickel
Niihama Nickel
RefineryElectrolytic Cobalt

Cobalt chemicals
Nickel chemicals

NAC(Philippines)

Battery materials
businessHyuga Smelting

Ferro-nickel

Figesbal(New Caledonia)

Montagnat

Green sand(New Caledonia)

Indonesia
Philippines

Full-scale prohibition of nickel ore exports is ongoing => Move toward conditional lifting of prohibition
Announcement of environmental audit results in February 2017
・Suspension of operations 2 nickel mines
・Mine closings 18 nickel mines

New Caledonia Raw materials source for Japanese and South Korean ferro-nickel smelters

Amid headwind conditions for securing nickel sources, we will
make maximal use of SMM's supply chain
SUMITOMO METAL MINING CO., LTD.

33

2) Smelting & Refining

Ⅲ(2) Toward a 150,000 ton structure for nickel (2)Supplemental Materials
Status of achievementof individual strategies

HPAL (High Pressure Acid Leach)Technology to recover Ni/Co from low-grade Ni oxide ore. CBNC was the first in the world to succeed at large-scalecommercial production.

From 2017 2H

Current production
volumeToward Taganito 36 kt/year operation

CBNC 24 kt
THPAL 30 kt

Philippines 2 HPAL
Toward 60 kt structure

THPAL expansion
investment¥300 million
Ni-Kt
60

Taganito 36 kt
CBNC 24 kt

MS production volume(2018 = production capacity)

50
40

THPAL

30

CBNC

20
10
0

2014

2015

2016
(F)
(予想)

2018

Stable operation at HPAL 2 sites; 20% expansion at Taganito
SUMITOMO METAL MINING CO., LTD.

34

2) Smelting & Refining

Ⅲ(2) Toward a 150,000 ton structure for nickel (3)Supplemental Materials
Status of achievementof individual strategies

Niihama Nickel Refinery（electrolytic nickel, nickel sulfate, electrolytic cobalt)
・Full operation with HPAL raw materials, PTVI matte, externally purchased raw materials
・Strengthening of ability to handle impurities ⇒ Plan to expand raw materials options

Hyuga Smelting (FeNi)
・2-kiln, 1-electric furnace operation ⇒ continuation of cost optimization operation

Harima Division (nickel sulfate)2015 3-Yr Plan
Nickel products / raw material
・Phase II expansion investment → Launch underway smoothly following completion Kt/year
composition
100

in September 2016
(Nickel sulfate
volume) kt

80
60

Ferro-nickel raw material

Production volume of nickel sulfate

播磨第2系列Harima No. 2 line

・Implementation of investment
aimed at Harima 49 kt/year
structure・Establishment of new lithium
nickel oxide (NCA) front-end
process

Harima No. 1 line
播磨第1系列Niihama Nickel Refinery
ニッケル⼯場

40
20
0

2015

2016
予想
(F)

75

2017

2018

Establishment ofHarima 49 kt/year
structure

Matte, etc.

Ferro-nickel

Nickel sulfate (Harima Smelter)
Nickel sulfate, etc.
(Niihama Nickel Refinery)

50

THPAL

Electrolytic nickel(Niihama Nickel Refinery)

25

0

CBNC

原料構成
Raw
material
composition

製品構成
Product
composition

Stable operation at domestic nickel refineries
SUMITOMO METAL MINING CO., LTD.

35

2) Smelting & Refining

Ⅲ(3) Preparation of Structure for Further Growth

Supplemental Materials
Status of achievementof individual strategies

Scandium¥4 billion
investment

・Production of intermediate products from HPAL process at Taganito
・Production of finished product (scandium oxide) at Harima Refinery
2018: Start of commercial production scheduled

Production plan
Production of SMM
World demand (SMM estimate)

7.5 t / year

Current world demand is 10–15 t/year (scandium oxide equivalent)

Aim for launch according to plan
15 3-Yr

18 3-Yr

After 21 3-Yr

Pomalaa Project (Indonesia)
PT Vale Indonesia holds mining rights
Implement F/S on possibility of refinery
construction2015 — Investigation of plant location
2016 — Preliminary survey for DFS
2017 — Start of DFS scheduled

Project start dateand investment
amount are
undecided

Appropriate investment decisions(Minimization of investment amount /confirmation of profitability)
SUMITOMO METAL MINING CO., LTD.

36

3) Materials

Ⅲ(1) 2015 3-Yr Business Plan Strategy and FY 2017 Priorities

Supplemental Materials
Status of achievementof individual strategies

Business strategies in the 2015 3-Yr Business Plan
Aggressive investment in growth strategies
Fields of in-vehicle devices, environment, andinformation and communications

Achieve smooth transition to next-generation products
through selection and concentration

Strengthen relationships with customers as partner
Collaborate from the development stage to new
products

Bolster new business development capability
Build systems for creating new products(¥100 million)

200

Segment profit of Materials Business

150

FY2018Segment profit target:¥20 billion

100
50
0

2012

2013

2014

2015

2016
(F)

15 3-Yr2018

FY 2017 priorities
Large-scale investment in battery materials, crystal
materials
Assured conversion into strategic capability and profits

Concentration of management resources on
growth areas
Achievement of independence throughsubsequent effects
SUMITOMO METAL MINING CO., LTD.

37

Ⅲ3) Materials (2) Battery Materials (1)Supplemental Materials
Status of achievementof individual strategies

FY 2015 3-Yr Business Plan: Expansion of production structure looking ahead toward
FY 2018 3-Yr Business Plan
Change in environment surrounding battery materials
Our strengths
・Product development with partner customers, from the

Restructuring of automobile battery manufacturers

development stage

Changes in automobile/battery manufacturer supply chains

Access to giant market

・Production of nickel and cobalt from own raw materials

Supply chain management through rapid growth of market

・Can offer varied product forms, from state close to raw
material to high value-added products

Securing of raw materials (nickel, cobalt, lithium)

Record of adoption of our battery materials (positive electrode material) and2015 3-Yr Business Plan (–2018) initiatives
・Nickel hydroxide
Hybrid vehicles Used in rechargeable
batteries

・Ternary materialxEV market

・Assured response to
demand for automobile
rechargeable batteriesHybrid vehicles
Used in lithium-ion batteries(Photo : TOYOTA Motor Corp.)

・Further expansion of NCA aimed at electric vehicles

Electric vehicles
Used in lithium-ion batteries

1,850 t/mo.
(2015 3-Yr Plan)

Expan
sion

・NCA

Toward 3,550 t/mo. structure(Completion scheduled for Jan
2018)

・Construction of new precursor plant at Harima Refinery
Toward structure of front-end process (precursor) 2 sites
back-end process (firing) 2 sites
SUMITOMO METAL MINING CO., LTD.

Toward market
expansion also
expected for2020-2030
・Establishment offurther production
structure・New productdevelopment tomeet needs383) Materials (2) Battery Materials (2) EV market growth and promotion ofⅢ

investment for increased production of NCA

Supplemental Materials
Status of achievementof individual strategies

Expansion in the market for electric automobiles overall
SMM is promoting investment for increased production of NCA
Index:
Changes in supply volume, withvolume (quantity basis) in 2012
set as 1
20.0

Movement in major materials for LIB and electricautomobile shipments

Number shipped
1,000/year
1400

18.0
1200
16.0
14.0

No. of BEVs shipped
Anode active material

1000

Separators
12.0
10.0

Electrolytic solution

800

SMM NCA
600

8.0
6.0

400

4.0
200
2.0
0

0.0
2012
2013
2014
2015
2016 (F)2017 (F)2018 (F)2019 (F)Data sources
BEV shipped units: B3 Report 16Q2
Major materials trends: Created based on "2014-2016 General Survey of Battery-Related Market Conditions," Fuji Keizai Co., Ltd.
SUMITOMO METAL MINING CO., LTD.

39Ⅲ3) Materials (3) Crystal substrate (LT/LN)

Supplemental Materials
Status of achievementof individual strategies

Build an expanded production system for crystal materials
LT/LN crystal substrates for SAW filters
Demand booming due to growth of multiband, high-speed communications

2016
Expansion investment from 210 k units → 300 k units/mo.
Completion of full-production structure, move toward global top shareCompletion of new factory building construction at Sumiko Kunitomi
Denshi

FY 2017
Construction of further expanded structure aimed at 400 k units/mo.
(Completion scheduled for September 2017)
Toward improved productivity and further increased share

Pieces(thousands)

Production capacity(planned)

400
300
200

Strengthen competitivenessby improving recovery rate and reducing costs

Grow together with customers as partner

100
0
2014

2015

2016

SUMITOMO METAL MINING CO., LTD.

2017

2018

40

Ⅲ

4) R&D
Development ofmineral resources
and metal process
Fundamental
technology
Analysis
Technology

Resource &Hydrometallurgy
Process Center

Organic resin
technology
Analysis technology

Computer aided
engineering andanalysis technology

Computer aided
engineering andanalysis technology

Information andcommunication
technology (ICT)Core
technology
Smelting andrefining process
technology

Cathode materials
for Lithium-ion
secondary batteryCoretechnology
Exploration, mining, andmineral processing
technology

Sierra Gorda Copper Mineof individual strategies

Coretechnology
Powder synthesis andsurface treatment
technology

Basic research

Smelting
and refining
process
technology
Exploration,mining, andmineralprocessing
technology

Status of achievement

Materials
Development

Fundamental
technology

Fundamental
technology

Supplemental Materials

Powdersynthesis
and surface
treatment
technology

Powdermaterial
basic
research

Nickel powder for MLCCs

Crystalgrowth andprocessing
technology

Single-crystal
lithium tantalate

Fundamental
technology

Powder material
basic researchCoretechnology
Crystal growth andprocessing Technology

Established new ICT promotion office in October 2016. Will aim to construct mechanisms for data analysis unified acrossthe company.

Concentration on growth strategy fields, search for "seeds" of next-generation business
SUMITOMO METAL MINING CO., LTD.

41

Ⅳ. Supplemental Materials (2) (ESG initiatives / data)

Ⅰ Business Overview
Ⅱ 2015 3-Yr Business Plan and Current Progress
Ⅲ

Supplemental Materials (1) (Status of achievement of
individual strategies)

Ⅳ Supplemental Materials (2) (ESG initiatives / data)

SUMITOMO METAL MINING CO., LTD.

42

Ⅳ1) ESG Initiatives (1) Corporate Governance System

Supplemental Materials
ESG initiatives

SMM’s Corporate GovernanceMaximizing the corporate value of the
SMM Group
Ensuring sound management practices

Framework with which to bring discipline toour corporate activities

Annual General Meeting of Shareholders

Board of Directors(Decision-Making and Supervision)

Governance Committee（appointment and compensationof executives, etc.）

Audit & Supervisory
Board(Auditing)

AdviseBusiness Execution(Executive Officer System)

Strengthening of corporate governance・Further strengthening of accountability => Receipt of award as company with excellent IR・Strengthening of Directors => Addition of 1 Outside Director
・Establishment of Governance Committee (advice on executive remuneration, personnel)

SUMITOMO METAL MINING CO., LTD.

43

Ⅳ1) ESG Initiatives (2) Governance Policy and Framework

Supplemental Materials
ESG initiatives

Corporate Governance Guideline
Basic Concept

・Corporate governance structure is toachieve SMM Group Corporate Philosophy
・Fulfill responsibility to stakeholders

Major Items

・Secure shareholder’s rights

・Policy of communication and openness with shareholders

・Corporate governance structure ・Clearly state the independence guideline of Outside Directors and auditors
・Expand support structure for Outside Directors and auditors

Corporate Governance Framework

Work to bringcorporate
governance to ahigher level
to increase corporate
value

SUMITOMO METAL MINING CO., LTD.

44

Ⅳ1) ESG Initiatives (3) CSR Activities and Policies

Supplemental Materials
ESG initiatives

SMM CSR
Goal: Sustainable co-existencewith society and the global
environment

Solve social issues through our core businessCommunication with Stakeholders

CSR Policy

1

SMM shall work to combat global warming by promoting recycling and effective resource utilization
while also targeting technological innovation and continuous improvements in energy efficiency.

2

SMM shall promote sustainable co-existence with society by respecting the needs of local communities
in which we operate around the world.

3

To continue sound business activities, SMM shall respect human rights and shall try to be a company
in which diverse human resources take active parts.

4

According safety the highest priority, SMM shall provide safe, comfortable working environments
and seek to eliminate occupational accidents.

5

SMM shall strengthen communications with all stakeholders to build healthy, trust-based relationships.

SUMITOMO METAL MINING CO., LTD.

45

1) ESG Initiatives (4) Six Key CSR Areas and Vision for 2020

Ⅳ

Supplemental Materials
ESG initiatives

Six Key CSR Areas and Vision for 2020
Effective Use of Resources

A company that generates resources using innovative technology

Environmental Preservation

A company that uses advanced technologies to reduce environmental
impacts and contributes to preserving the global environment

Contribution to Society and
Local Communities

A company that earns trust and contributes to regional development throughour business and social contribution activities rooted in each region

Respect for People andHuman Rights

A company where diverse human resources exercise their ability sufficiently
and take a vibrant and active part in each field
A company that works with its stakeholders to strive
for a society that actively respects human rights

Occupational Health and
SafetyA company that accords safety the highest priority and provides
comfortable working environments

Stakeholder Communication

A company that works to communicate transparently with allworldwide stakeholders to deepen mutual understanding

SUMITOMO METAL MINING CO., LTD.

46

Ⅳ1) ESG Initiatives (5) Safety Initiatives

Supplemental Materials
ESG initiatives

Safety — To achieve by FY2018
Use top-down approach to conduct effective safety
activities at business sites and reduce major risks throughappropriate equipment improvements.

Accidents
80

Practice good communication to improve safety
awareness among all employees and conduct proper line
management to ensure safety.

2015 3-Yr Plan period

Limit domestic work-related accidents to 5 or lessTargets

Limit overseas work-related accidents to 9 or lessDomestic Work-Related Accidents
64 (2000)

60
40

2016
22

20
0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162015 3-Year Plan
Target 5

15 3YrSUMITOMO METAL MINING CO., LTD.

47

1) ESG Initiatives(6) Human Rights Policy and Human Resources Development

Ⅳ

Supplemental Materials
ESG initiatives

SMM Group Policy on Human Rights (key elements)
1. Compliance with domestic laws and ordinances, as well as international standards inregards to human rights
2. No discrimination
3. Prevention of child labor and forced labor
4. Establishment of appropriate measures and procedures for responding to human rights

problems if they should occur
5. Ongoing implementation of human rights awareness and outreach activities

Human Resources Development Policy
1. Develop and train the human resources necessary to ensure growth strategy success
2. Build systems that allow diverse human resources to exercise their potential
3. Develop organizations and a corporate culture that are proactive, collaborative, and self-

drivenSUMITOMO METAL MINING CO., LTD.

48

Ⅳ2) Performance Trends

Supplemental Materials
Data

2016
Forecast

15 3-Yr
2018
Estimate

8,554

7,750

10,600

1,258

597

760

1,400

1,144

1,742

-128

10

1,700

171

298

239

-732

-870

270

653

866

803

911

-3

-150

1,200

ROA（%）

5.9

6.9

5.5

5.5

-

-

6

ROE（%）

10.1

12.1

9.5

9.3

-

-

10

Dividend Per Share(¥)

28.0

34.0

37.0

48.0

31.0

11.0

N/A

Copper ($/t)

8,485

7,855

7,104

6,554

5,215

5,046

6,000

Nickel ($/lb)

9.6

7.7

6.5

7.6

4.7

4.6

7.0

Gold ($/Toz)

1,646

1,654

1,327

1,248

1,150

1,241

1,150

Exchange (¥/$)

79.1

83.1

100.2

109.9

120.2

108.7

120.0

2011

2012

2013

2014

2015

8,479

8,085

8,305

9,213

Operating Income

886

958

754

Recurring Profit

1,088

1,150

232

Net Sales

Equity Method profit
Net Income(Profit attributable to owners of parent)

SUMITOMO METAL MINING CO., LTD.

49

Ⅳ3) Balance Sheet

Balance Sheet (Projections)

Supplemental Materials
Data

JPY100M

2019/3
Projection (A)2016/12
Performance (B)(B)-(A)

Current Assets

4,970

5,729

759

Fixed Assets

14,34010,445-3,895

19,31016,174-3,136

Interest-bearing debt

4,130

4,923

+793

Other liabilities

1,520

1,702

+182

Total Liabilities

5,650

6,625

+975

Total Net Assets

13,660

9,548-4,112

Total Liabilities & Net
Assets19,31016,174-3,136Equity Ratio(%)

65%

54.8%

-10.2%

D/E Ratio

0.33

0.56

-0.23

12,5408,855+3,685

Total Assets

Shareholder's equity(2015 3-Yr Plan, 2018 endof year)(2016 end of 3Q)

SUMITOMO METAL MINING CO., LTD.

50

Ⅳ4) Sensitivity

Supplemental Materials
Data

JPY100M

Element

Degree of variation

FY 2016
Operating income/Recurring profit

Cu±100$/t

14/28

Ni±10￠/lb

16/18

Au±10$/toz

5/5

JP¥/＄

±1¥/$

7/5

(Remark) USD/JPY translation include RC-related and Conversion rate ofoverseas consolidated / equity-method affiliate companies' profit.

SUMITOMO METAL MINING CO., LTD.

51

Ⅳ5) Prices of Metals
$/toz
2,400

2,000

Supplemental Materials
Data

$/t
60,000Au($/toz)Cu($/t)50,000Ni($/t)1,600

40,0001,200

30,000800

20,000400

10,0000

0

SUMITOMO METAL MINING CO., LTD.

52

Ⅳ6) Forex Trends

Supplemental Materials
Data

¥/$

$/€

130

1.60
JPY/US$120

123.75

US$/EUR

1.50

1.442

110

1.40

100

1.30

90

1.20

80

1.079

1.10

76.75
70

1.00

SUMITOMO METAL MINING CO., LTD.

53

Note

The materials provided herein are not intended as disclosure under the Securities Law,
and no warranty is made as to their completeness or accuracy.
Any projections included in these materials are based solely on information available atthe time of this briefing, and are subject to change based on market conditions,competitive conditions, and a number of other factors.
Therefore, we ask that you refrain from making any investment decisions based on thesematerials alone. The Company cannot be held responsible in any way for any losses that
may occur as a result of the use of these materials.

All copyrights, trademarks, and intellectual property rights attaching to the materials herein
are the sole property of Sumitomo Metal Mining Co., Ltd.

Sumitomo Metal Mining Co., Ltd.

SUMITOMO METAL MINING CO., LTD.

54