##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 FORM 20-F
 (Mark One)o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934ORx
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended March 31, 2010
 ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from  toORo
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of event requiring this shell company report:
  JX HOLDINGS KABUSHIKI KAISHA
 (Exact name of Registrant as specified in its charter)
 JX HOLDINGS, INC.
 (Translation of Registrants name into English)
 Japan
 (Jurisdiction of incorporation or organization)
 6-3, Otemachi 2-chome, Chiyoda-ku
Tokyo, 100-8161 Japan  (Address of principal executive offices)
 Hisao Abe
General Manager
IFRS Project Department
 6-3, Otemachi 2-chome, Chiyoda-ku
Tokyo, 100-8161 Japan
Telephone: +81-3-6275-5006
Facsimile: +81-3-3276-1245
 
 
     o x
  o x
   x o
  o o
 o o x
  x U.S. GAAP
    
    o International Financial Reporting Standards as issued by the International Accounting Standards Board
    
    o Other
  o o
  o x




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##### 



TABLE OF CONTENTS
 PageCertain Defined Terms, Conventions and Presentation of Financial Information
    
    
    iiForward-Looking Statements
    
    
    iiPART I
    
    
    
    
    4Item 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    4Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    4Item 3.
    
    Key Information
    
    
    4Item 4.
    
    Information on the Company
    
    
    29Item 4A.
    
    Unresolved Staff Comments
    
    
    80Item 5.
    
    Operating and Financial Review and Prospects
    
    
    80Item 6.
    
    Directors, Senior Management and Employees
    
    
    136Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    139Item 8.
    
    Financial Information
    
    
    140Item 9.
    
    The Offer and Listing
    
    
    141Item 10.
    
    Additional Information
    
    
    142Item 11.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    157Item 12.
    
    Description of Securities Other than Equity Securities
    
    
    159PART II
    
    
    
    
    160Item 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    160Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    160Item 15.
    
    Controls and Procedures
    
    
    160Item 16A.
    
    Audit Committee Financial Expert
    
    
    160Item 16B.
    
    Code of Ethics
    
    
    160Item 16C.
    
    Principal Accountant Fees and Services
    
    
    160Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    161Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    161Item 16F.
    
    Change in Registrants Certifying Accountant
    
    
    161Item 16G.
    
    Corporate Governance
    
    
    161PART III
    
    
    
    
    162Item 17.
    
    Financial Statements
    
    
    162Item 18.
    
    Financial Statements
    
    
    162Item 19.
    
    Exhibits
    
    
    162SIGNATURES
    
    
    163INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    F-1EXHIBIT INDEXEX-1.1EX-1.2EX-1.3EX-8.1EX-8.2EX-12.1EX-13.1EX-15.1EX-15.2
  i




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##### Table of Contents



CERTAIN DEFINED TERMS, CONVENTIONS AND
PRESENTATION OF FINANCIAL INFORMATION
 As used in this annual report, unless the context otherwise requires:
 
    
    JX Holdings refers to JX Holdings, Inc. and its subsidiaries;
    
    Nippon Oil refers to Nippon Oil Corporation and its subsidiaries; and
    
    Nippon Mining refers to Nippon Mining Holdings, Inc. and its subsidiaries.
     
 FORWARD-LOOKING STATEMENTS
   
    
    the ability of JX Holdings to integrate successfully the businesses of Nippon Oil and
Nippon Mining;
    
    the realization of anticipated benefits and synergies of the integration of Nippon Oil
and Nippon Mining, including planned reductions in petroleum refining capacity;
 ii




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##### Table of Contents




    
    the ability to maintain margins on refined petroleum products, petrochemicals, refined
and fabricated metals and refined copper;
    
    prices for crude oil, natural gas and copper concentrate;
    
    economic conditions in Japan, Asia, particularly China, and other countries where JX
Holdings operates;
    
    the ability to enter into and perform in overseas strategic alliances;
    
    domestic and international political developments and laws and regulations, such as
restrictions on production and imports and exports, tax increases, and environmental laws
or regulations;
    
    natural disasters;
    
    potential revisions of reserve estimates;
    
    foreign exchange rate fluctuations;
    
    the ability to find or acquire rights to additional oil and natural gas reserves; and
    
    potential delays or failures in the execution of exploration and development plans.
 iii




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##### Table of Contents



PART I
 
 Item 1.
    
    Identity of Directors, Senior Management and Advisers
  
 Item 2.
    
    Offer Statistics and Expected Timetable
  
 Item 3.
    
    Key Information
 SELECTED HISTORICAL FINANCIAL DATA OF NIPPON OIL
   U.S. GAAP Selected Historical Financial Data:
 As
of and for the Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Millions of yen except per share data and numbers of shares)Statements of Operations:Revenues
    
    ¥
    4,981,281
    
    
    ¥
    6,368,424
    
    
    ¥
    6,548,809Cost of sales
    
    
    (4,588,857
    )
    
    
    (6,437,691
    )
    
    
    (6,031,480
    )Selling, general and administrative expenses
    
    
    (271,203
    )
    
    
    (274,522
    )
    
    
    (272,825
    )Operating income (loss)
    
    
    126,017
    
    
    
    (447,815
    )
    
    
    232,492Income (loss) before income taxes and equity in earnings of affiliates
    
    
    115,871
    
    
    
    (456,131
    )
    
    
    218,253Net income (loss)
    
    
    68,643
    
    
    
    (297,602
    )
    
    
    131,400Less: Net
(income) loss  attributable to noncontrolling interests
    
    
    (3,694
    )
    
    
    1,612
    
    
    
    (3,375
    )Net income (loss) attributable to Nippon Oil Corporation
    
    
    64,949
    
    
    
    (295,990
    )
    
    
    128,025Per Share Data:Net income (loss) attributable to Nippon Oil Corporation
    
    ¥
    44.81
    
    
    ¥
    (204.01
    )
    
    ¥
    88.12Cash dividends per share
    
    
    18
    
    
    
    20
    
    
    
    12Cash
dividends per share (U.S.
dollars)(1)
    
    $
    0.19
    
    
    $
    0.20
    
    
    $
    0.12Balance Sheets:Total current assets
    
    ¥
    1,967,760
    
    
    ¥
    1,800,371
    
    
    ¥
    2,509,199Total assets
    
    
    4,180,239
    
    
    
    3,986,815
    
    
    
    4,719,177Total current liabilities
    
    
    2,148,890
    
    
    
    1,944,813
    
    
    
    2,312,763Total liabilities
    
    
    3,212,520
    
    
    
    3,103,076
    
    
    
    3,351,015Equity attributable to Nippon Oil Corporation
    
    
    887,085
    
    
    
    802,279
    
    
    
    1,263,491Common stock, no par value
    
    
    139,437
    
    
    
    139,437
    
    
    
    139,437Number of shares (in thousands) as adjusted to reflect
changes in capital:Authorized
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000Issued
    
    
    1,464,508
    
    
    
    1,464,508
    
    
    
    1,464,508Treasury stock
    
    
    15,339
    
    
    
    15,097
    
    
    
    11,256
 
 (1)
    
    The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate
for Japanese yen on the last date of each fiscal year. 4




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Japanese GAAP Selected Historical Financial Data
 As
of and for the Fiscal Year Ended March 31,2010
    
    2009
    

    2008
    
    2007
    
    2006(Millions of yen except per share data and numbers of shares)Statements of
Operations:Revenues
    
    ¥
    5,774,279
    
    
    ¥
    7,389,234
    
    
    ¥
    7,523,990
    
    
    ¥
    6,624,256
    
    
    ¥
    6,117,988Cost of sales
    
    
    (5,406,740
    )
    
    
    (7,414,998
    )
    
    
    (6,982,966
    )
    
    
    (6,176,656
    )
    
    
    (5,521,192
    )Selling, general and administrative expenses
    
    
    (280,802
    )
    
    
    (286,743
    )
    
    
    (277,061
    )
    
    
    (287,915
    )
    
    
    (292,866
    )Operating income (loss)
    
    
    86,735
    
    
    
    (312,506
    )
    
    
    263,962
    
    
    
    159,684
    
    
    
    303,930Ordinary income (loss)
    
    
    113,302
    
    
    
    (275,448
    )
    
    
    275,666
    
    
    
    186,611
    
    
    
    309,088Income (loss) before income taxes and minority
interests
    
    
    91,525
    
    
    
    (365,569
    )
    
    
    279,812
    
    
    
    172,205
    
    
    
    298,332Net income (loss)
    
    
    43,295
    
    
    
    (251,613
    )
    
    
    148,306
    
    
    
    70,221
    
    
    
    166,510Per Share Data:Net income (loss)
    
    ¥
    29.70
    
    
    ¥
    (172.42
    )
    
    ¥
    101.49
    
    
    ¥
    48.12
    
    
    ¥
    114.08Cash dividends per share
    
    
    18
    
    
    
    20
    
    
    
    12
    
    
    
    12
    
    
    
    12Cash dividends per share (U.S. dollars)(1)
    
    $
    0.19
    
    
    $
    0.20
    
    
    $
    0.12
    
    
    $
    0.10
    
    
    $
    0.10Balance Sheets:Total current assets
    
    ¥
    1,905,267
    
    
    ¥
    1,758,489
    
    
    ¥
    2,487,526
    
    
    ¥
    2,262,528
    
    
    ¥
    2,140,951Total assets
    
    
    4,129,232
    
    
    
    3,969,730
    
    
    
    4,594,197
    
    
    
    4,385,533
    
    
    
    4,231,814Total current liabilities
    
    
    2,078,492
    
    
    
    1,890,264
    
    
    
    2,258,130
    
    
    
    2,072,145
    
    
    
    1,941,846Total liabilities
    
    
    3,070,142
    
    
    
    2,953,424
    
    
    
    3,164,930
    
    
    
    3,053,551
    
    
    
    2,992,247Total net assets, including minority interest
    
    
    1,059,089
    
    
    
    1,016,306
    
    
    
    1,429,266
    
    
    
    1,331,981
    
    
    
    1,239,566
    (2)Common stock, no par value
    
    
    139,437
    
    
    
    139,437
    
    
    
    139,437
    
    
    
    139,437
    
    
    
    139,437Number of shares (in thousands) as adjusted to
reflect changes in capital:Authorized
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000Issued
    
    
    1,464,508
    
    
    
    1,464,508
    
    
    
    1,464,508
    
    
    
    1,464,508
    
    
    
    1,464,508Treasury stock
    
    
    6,872
    
    
    
    6,630
    
    
    
    2,789
    
    
    
    2,743
    
    
    
    7,237
 
 (1)
    
    The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate
for Japanese yen on the last date of each fiscal year.(2)
    
    As of March 31, 2007, Nippon Oil adopted the
Accounting Standard for Statement of Changes in
Net Assets (ASBJ Statement No. 6, December 27, 2005) and Guidance on Accounting Standard for
Statement of Changes in Net Assets (ASBJ Guidance No. 9, December 27, 2005); therefore,
amounts corresponding to fiscal year ended March 31, 2006 have been determined by
retrospectively applying these standards. 5




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##### Table of Contents



SELECTED HISTORICAL FINANCIAL DATA OF NIPPON MINING
   U.S. GAAP Selected Historical Financial Data:
 As of and for the Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Millions of yen except per share data and numbers of shares)Statements of Operations:Revenues
    

    ¥
    2,745,700
    

    

    ¥
    3,494,853
    

    


    ¥
    3,803,926Cost of sales
    

    
    2,494,166
    

    

    
    3,425,076
    

    

    
    3,499,505Selling, general and administrative expenses
    
    
    178,441
    
    
    
    179,244
    
    
    
    185,791Operating income (loss)
    
    
    67,541
    
    
    
    (123,891
    )
    
    
    115,813Income (loss) before income taxes
    
    
    87,845
    
    
    
    (90,574
    )
    
    
    205,291Net income (loss)
    
    
    64,476
    
    
    
    (14,613
    )
    
    
    126,197Less: Net income attributable to noncontrolling interests
    
    
    14,904
    
    
    
    9,726
    
    
    
    25,272Net income (loss) attributable to Nippon Mining
Holdings, Inc.
    
    
    49,572
    
    
    
    (24,339
    )
    
    
    100,925Per Share Data:Net income (loss) attributable to Nippon Mining Holdings,
Inc., basic
    
    ¥
    53.50
    
    
    ¥
    (26.26
    )
    
    ¥
    108.89Net income (loss) attributable to Nippon Mining Holdings,
Inc., diluted
    
    
    53.44
    
    
    
    (26.26
    )(1)
    
    
    108.81Cash dividends per share
    
    
    15
    
    
    
    14
    
    
    
    16Cash dividends per share (U.S. dollars)(2)
    
    $
    0.16
    
    
    $
    0.14
    
    
    $
    0.16Balance Sheets:Total current assets
    
    ¥
    952,728
    
    
    ¥
    791,242
    
    
    ¥
    1,181,941Total assets
    
    
    2,014,147
    
    
    
    1,845,112
    
    
    
    2,234,199Total current liabilities
    
    
    894,063
    
    
    
    766,885
    
    
    
    1,077,200Long-term debt, less current portion
    
    
    356,126
    
    
    
    375,025
    
    
    
    328,273Total liabilities
    
    
    1,382,552
    
    
    
    1,278,813
    
    
    
    1,567,360Equity
attributable to Nippon Mining Holdings, Inc.
    
    
    552,972
    
    
    
    505,616
    
    
    
    596,358Common stock, no par value
    
    
    73,920
    
    
    
    73,920
    
    
    
    73,920Number of shares (in thousands)Authorized
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000Issued
    
    
    928,462
    
    
    
    928,462
    
    
    
    928,462Treasury stock
    
    
    1,102
    
    
    
    2,091
    
    
    
    1,649
 
 (1)
    
    This figure does not include 862,079 shares of common stock issuable upon the exercise of
certain stock options.(2)
    
    The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate
for Japanese yen on the last date of each fiscal year. 6




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##### Table of Contents



Japanese GAAP Selected Historical Financial Data
 As of and for the Fiscal Year Ended March 31,2010
    
    2009
    
    2008
    
    2007
    
    2006(Millions of yen except per share data and numbers of shares)Statements of Operations:Revenues
    
    ¥
    3,233,738
    
    
    ¥
    4,065,059
    
    
    ¥
    4,339,472
    
    
    ¥
    3,802,447
    
    
    ¥
    3,026,262Cost of sales
    
    
    3,009,182
    
    
    
    3,969,468
    
    
    
    4,038,589
    
    
    
    3,485,283
    
    
    
    2,712,989Selling, general and administrative expenses
    
    
    180,818
    
    
    
    197,258
    
    
    
    197,697
    
    
    
    184,906
    
    
    
    168,825Operating income (loss)
    
    
    43,738
    
    
    
    (101,667
    )
    
    
    103,186
    
    
    
    132,258
    
    
    
    144,448Income (loss) before special items
    
    
    73,967
    
    
    
    (67,433
    )
    
    
    192,026
    
    
    
    224,236
    
    
    
    188,722Income (loss) before income taxes and minority
interest
    
    
    60,424
    
    
    
    (85,836
    )
    
    
    188,295
    
    
    
    220,082
    
    
    
    172,644Net income (loss)
    
    
    29,811
    
    
    
    (40,794
    )
    
    
    99,299
    
    
    
    106,430
    
    
    
    96,905Per Share Data:Net income (loss), basic
    
    ¥
    32.17
    
    
    ¥
    (44.02
    )
    
    ¥
    107.14
    
    
    ¥
    117.98
    
    
    ¥
    113.87Net income (loss), diluted
    
    
    32.14
    
    
    
    (44.02
    )(1)
    
    
    107.06
    
    
    
    117.91
    
    
    
    113.84Cash dividends per share
    
    
    15
    
    
    
    14
    
    
    
    16
    
    
    
    16
    
    
    
    15Cash dividends per share (U.S. dollars)(2)
    
    $
    0.16
    
    
    $
    0.14
    
    
    $
    0.16
    
    
    $
    0.14
    
    
    $
    0.13Balance Sheets:Total current assets
    
    ¥
    945,460
    
    
    ¥
    792,082
    
    
    ¥
    1,157,158
    
    
    ¥
    996,793
    
    
    ¥
    906,380Total assets
    
    
    2,067,507
    
    
    
    1,886,083
    
    
    
    2,251,208
    
    
    
    2,056,407
    
    
    
    1,859,583Total current liabilities
    
    
    896,712
    
    
    
    758,450
    
    
    
    1,058,571
    
    
    
    973,495
    
    
    
    921,019Long-term debt, less current portion
    
    
    336,565
    
    
    
    341,993
    
    
    
    265,726
    
    
    
    215,802
    
    
    
    275,424Total liabilities
    
    
    1,360,944
    
    
    
    1,226,145
    
    
    
    1,485,944
    
    
    
    1,355,343
    
    
    
    1,346,077Total net assets, including minority interest
    
    
    706,563
    
    
    
    659,938
    
    
    
    765,264
    
    
    
    701,064
    
    
    
    513,506
    (3)Common stock, no par value
    
    
    73,920
    
    
    
    73,920
    
    
    
    73,920
    
    
    
    73,920
    
    
    
    40,000Number of shares (in thousands) as adjusted to
reflect changes in capital:Authorized
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000Issued
    
    
    928,462
    
    
    
    928,462
    
    
    
    928,462
    
    
    
    928,462
    
    
    
    848,462Treasury stock
    
    
    1,102
    
    
    
    2,091
    
    
    
    1,649
    
    
    
    1,553
    
    
    
    1,415
 
 (1)
    
    This figure does not include 862,079 shares of common stock issuable upon the exercise of
certain stock options.(2)
    
    The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate
for Japanese yen on the last date of each fiscal year.(3)
    
    As of March 31, 2007, Nippon Mining adopted the Accounting Standard for Statement of Changes
in Net Assets (ASBJ Statement No. 6, December 27, 2005) and Guidance on Accounting Standard
for Statement of Changes in Net Assets (ASBJ Guidance No. 9, December 27, 2005); therefore,
amounts corresponding to fiscal year ended March 31, 2006 have been determined by
retrospectively applying these standards. 7




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##### Table of Contents



UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
     
    
    accompanying notes to the unaudited pro forma combined financial information;
    
    historical audited consolidated financial statements of Nippon Oil for the fiscal year
ended March 31, 2010, included in this annual report; and
    
    historical audited consolidated financial statements of Nippon Mining for the fiscal
year ended March 31, 2010, included in this annual report.
  8




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##### Table of Contents



UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 2010
 Historical
    
    HistoricalNippon
    
    Nippon
    
    Pro Forma
    
    Pro FormaOil
    
    Mining
    
    Adjustments
    
    Combined(millions of yen)ASSETSCurrent assets:Cash and cash equivalents
    
    ¥
    181,737
    
    
    ¥
    87,170
    
    
    ¥
    
    

    
    ¥
    268,907Accounts and notes receivable, net:Trade
    
    
    765,929
    
    
    
    333,830
    
    
    
    (23,558
    )
(a)
    
    
    1,076,201Other
    
    
    121,517
    
    
    
    
    
    
    
    
    

    
    
    121,517Inventories
    
    
    809,327
    
    
    
    437,967
    
    
    
    22,724
    
(b)
    
    
    1,270,018Deferred income taxes
    
    
    27,766
    
    
    
    9,392
    
    
    
    
    

    
    
    37,158Other current assets
    
    
    61,484
    
    
    
    84,369
    
    
    
    
    

    
    
    145,853Total current assets
    
    
    1,967,760
    
    
    
    952,728
    
    
    
    (834
    )

    
    
    2,919,654Non-current assets:Property, plant, equipment and oil
and natural gas properties, net
    
    
    1,551,101
    
    
    
    696,323
    
    
    
    68,093
    
(d)
    
    
    2,315,517Investment in affiliates
    
    
    139,600
    
    
    
    173,735
    
    
    
    64,759
    
(e)
    
    
    378,094Investment securities
    
    
    239,232
    
    
    
    50,612
    
    
    
    
    

    
    
    289,844Intangible assets
    
    
    
    
    
    
    
    
    
    
    18,252
    
(f)
    
    
    18,252Deferred income taxes
    
    
    157,739
    
    
    
    79,896
    
    
    
    
    

    
    
    237,635Other non-current assets
    
    
    124,807
    
    
    
    60,853
    
    
    
    (8,480
    )
(g)
    
    
    177,180Total non-current assets
    
    
    2,212,479
    
    
    
    1,061,419
    
    
    
    142,624
    

    
    
    3,416,522Total assets
    
    ¥
    4,180,239
    
    
    ¥
    2,014,147
    
    
    ¥
    141,790
    

    
    ¥
    6,336,176
  9




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##### Table of Contents



UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (CONTINUED)
AS OF MARCH 31, 2010
 Historical
    
    HistoricalNippon
    
    Nippon
    
    Pro Forma
    
    Pro FormaOil
    
    Mining
    
    Adjustments
    
    Combined(millions of yen)LIABILITIES AND EQUITYCurrent liabilities:Trade accounts and notes payable
    
    ¥
    501,624
    
    
    ¥
    252,835
    
    
    ¥
    (23,558
    )
(a)
    
    ¥
    730,901Short-term debt
    
    
    778,833
    
    
    
    346,448
    
    
    
    
    

    
    
    1,125,281Current portion of long-term debt
    
    
    94,603
    
    
    
    81,860
    
    
    
    23
    
(h)
    
    
    176,486Accrued expenses
    
    
    39,845
    
    
    
    81,818
    
    
    
    
    

    
    
    121,663Excise taxes payable
    
    
    311,571
    
    
    
    76,448
    
    
    
    
    

    
    
    388,019Income taxes payable
    
    
    24,064
    
    
    
    4,462
    
    
    
    
    

    
    
    28,526Other current liabilities
    
    
    398,350
    
    
    
    50,192
    
    
    
    10,442
    
(c)
    
    
    458,984Total current liabilities
    
    
    2,148,890
    
    
    
    894,063
    
    
    
    (13,093
    )
    
    
    
    3,029,860Non-current liabilities:Long-term debt, less current portion
    
    
    777,964
    
    
    
    356,126
    
    
    
    537
    
    (h)
    
    
    1,134,627Pension and severance benefits
    
    
    46,499
    
    
    
    60,219
    
    
    
    
    
    
    
    
    106,718Deferred income taxes
    
    
    151,375
    
    
    
    49,154
    
    
    
    69,260
    
    (c)
    
    
    269,789Other non-current liabilities
    
    
    87,792
    
    
    
    22,990
    
    
    
    
    

    
    
    110,782Total non-current liabilities
    
    
    1,063,630
    
    
    
    488,489
    
    
    
    69,797
    

    
    
    1,621,916Total liabilities
    
    
    3,212,520
    
    
    
    1,382,552
    
    
    
    56,704
    
    
    
    
    4,651,776Commitments and contingenciesStockholders equity:Common stock, no par value
    
    
    139,437
    
    
    
    73,920
    
    
    
    (113,357
    )
(i)
    
    
    100,000Capital surplus
    
    
    275,697
    
    
    
    315,895
    
    
    
    155,277
    
(i)
    
    
    746,869Retained earnings
    
    
    516,203
    
    
    
    212,798
    
    
    
    (212,798
    )
(i)
    
    
    732,985216,782
    
(j)Accumulated other comprehensive
loss
    
    
    (36,062
    )
    
    
    (49,242
    )
    
    
    49,242
    
(i)
    
    
    (36,062
    )Treasury stock, at cost
    
    
    (8,190
    )
    
    
    (399
    )
    
    
    399
    
    (i)
    
    
    (8,190
    )Equity attributable to Nippon
Oil, Nippon Mining, and Pro
Forma Combined
    
    
    887,085
    
    
    
    552,972
    
    
    
    95,545
    

    
    
    1,535,602Noncontrolling interests
    
    
    80,634
    
    
    
    78,623
    
    
    
    (10,459
    )
(k)
    
    
    148,798Total equity
    
    
    967,719
    
    
    
    631,595
    
    
    
    85,086
    
    
    
    
    1,684,400Total liabilities and equity
    
    ¥
    4,180,239
    
    
    ¥
    2,014,147
    
    
    ¥
    141,790
    
    
    
    ¥
    6,336,176
  10




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##### Table of Contents



UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2010
 Historical
    
    HistoricalNippon
    
    Nippon
    
    Pro Forma
    
    Pro FormaOil
    
    Mining
    
    Adjustments
    
    Combined(millions of yen, except per share data)Revenues
    
    ¥
    4,981,281
    
    
    ¥
    2,745,700
    
    
    ¥
    
    

    
    ¥
    7,726,981Cost of sales
    
    
    (4,588,857
    )
    
    
    (2,494,166
    )
    
    
    
    

    
    
    (7,083,023
    )Selling, general and administrative expenses
    
    
    (271,203
    )
    
    
    (178,441
    )
    
    
    (1,116
    )
    (a)
    
    
    (447,325
    )(1,396
    )
    (b)4,831
    
    (c)Gain (loss) on disposition of property,
plant and equipment, net
    
    
    19,204
    
    
    
    (3,477
    )
    
    
    
    

    
    
    15,727Loss on impairment of property, plant and
equipment and oil and natural gas properties
    
    
    (14,408
    )
    
    
    (2,075
    )
    
    
    
    
    
    
    
    (16,483
    )Operating income
    
    
    126,017
    
    
    
    67,541
    
    
    
    2,319
    
    
    
    
    195,877Interest expense, net
    
    
    (22,175
    )
    
    
    (10,074
    )
    
    
    68
    
    (d)
    
    
    (32,181
    )Foreign
currency exchange (losses) gains, net
    
    
    (3,809
    )
    
    
    922
    
    
    
    
    
    
    
    
    (2,887
    )Loss on impairment of investment securities
    
    
    (6,117
    )
    
    
    (5,354
    )
    
    
    
    
    
    
    
    (11,471
    )Dividend income
    
    
    10,063
    
    
    
    2,842
    
    
    
    
    
    
    
    
    12,905Other income (loss), net
    
    
    11,892
    
    
    
    (3,092
    )
    
    
    
    
    
    
    
    8,800Income before income taxes and equity in
earnings of affiliates
    
    
    115,871
    
    
    
    52,785
    
    
    
    2,387
    
    
    
    
    171,043Provision for income taxes
    
    
    (44,758
    )
    
    
    (23,369
    )
    
    
    (649
    )
    (e)
    
    
    (68,776
    )Equity in
(losses) earnings of affiliates
    
    
    (2,470
    )
    
    
    35,060
    
    
    
    (977
    )
    (f)
    
    
    31,613Net income
    
    
    68,643
    
    
    
    64,476
    
    
    
    761
    
    
    
    
    133,880Less: Net income attributable to
noncontrolling interests
    
    
    (3,694
    )
    
    
    (14,904
    )
    
    
    
    
    
    
    
    (18,598
    )Net income attributable to Nippon Oil,
Nippon Mining, and Pro Forma Combined
    
    ¥
    64,949
    
    
    ¥
    49,572
    
    
    ¥
    761
    
    
    
    ¥
    115,282Net income per share attributable to Nippon
Oil, Nippon Mining, and Pro Forma Combined:Basic
    
    ¥
    44.81
    
    
    ¥
    53.50
    
    
    ¥
    
    

    
    ¥
    46.54Diluted
    
    
    44.81
    
    
    
    53.44
    
    
    
    
    

    
    
    46.52Weighted-average shares used to calculate
earnings per share (in thousands):Basic
    
    
    1,449,289
    
    
    
    926,538
    
    
    
    101,450
    

    
    
    2,477,277Diluted
    
    
    1,449,289
    
    
    
    927,595
    
    
    
    101,450
    

    
    
    2,478,334
  11




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##### Table of Contents



NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 1.
    
    Description of the Transaction and Basis of Presentation
       2.
    
    Accounting Policies
  12




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##### Table of Contents



3.
    
    Consideration Transferred
  Millions of YenNumber of shares of Nippon Mining common stock outstanding as of April
1, 2010 (thousands of shares)
    
    
    928,462Multiplied by Nippon Mining exchange ratio of 1.00 JX Holdings share
for each share of common stock of Nippon Mining
    
    
    1.00Multiplied by the market price of JX Holdings stock as of April 1, 2010 (yen)
    
    ¥
    465Consideration transferred
    
    
    
    
    
    ¥
    431,735
 4.
    
    Estimate of Assets Acquired and Liabilities Assumed
  Millions of YenFair value of total consideration transferred
    
    ¥
    431,735Fair values of identifiable assets acquired:Cash and cash equivalents
    
    
    87,170Accounts and notes receivable
    
    
    333,830Inventories
    
    
    460,691Property, plant, equipment and oil and natural gas properties
    
    
    764,416Intangible assets
    
    
    18,252Investment securities
    
    
    50,612Investments in affiliates
    
    
    238,494Other current and non-current assets
    
    
    136,742Deferred income taxes
    
    
    89,288Fair values of identifiable liabilities assumed:Accounts and notes payable and accrued expenses
    
    
    (334,653
    )Short-term debt
    
    
    (346,448
    )Long-term
debt (including current portion)
    
    
    (438,546
    )Income and excise taxes payable
    
    
    (80,910
    )Other current and non-current liabilities
    
    
    (143,843
    )Deferred income taxes
    
    
    (118,414
    )Noncontrolling interests
    
    
    (68,164
    )Fair value of net assets acquired
    
    
    648,517Gain on bargain purchase
    
    ¥
    216,782
 13




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##### Table of Contents



5.
    
    Pro Forma Balance Sheet Adjustments
 (a)
    
    Inter-company transactions
 To eliminate inter-company receivables and payables between Nippon Oil and Nippon Mining as of
March 31, 2010.
 (b)
    
    Inventories
 To adjust inventories to estimated fair value.
 (c)
    
    Deferred income taxes
 To provide deferred taxes and other tax adjustments.JX Holdings has applied a blended tax rate of 46% when estimating the tax
impact on the pro forma adjustment, representing a weighted-average estimate of the statutory
tax rates in the various jurisdictions where pro forma adjustments are reasonably expected to
occur. JX Holdings believes that using a blended tax rate is factually
supportable in that it is derived from statutory rates and recognize
that JX Holdings is a
large multinational corporation with operations in many countries.
The effective tax rate of JX Holdings could be significantly different (either higher or lower) depending on
post-acquisition activities, including repatriation decisions, cash needs and the actual
geographical mix of income.
 (d)
    
    Property, plant, equipment and oil and natural gas properties
 To adjust property, plant, equipment and oil and natural gas properties to estimated fair value.
 (e)
    
    Investment in affiliates
 To adjust investments in affiliates to estimated fair value.
 (f)
    
    Intangible assets
 To reflect the recognition of intangible assets to estimated fair value. Intangible assets
mainly represent credit card customer relationships, franchise agreements and developed
technologies.
 (g)
    
    Goodwill
 To eliminate the historical goodwill balance included within Nippon Minings financial
statements as of March 31, 2010.
 (h)
    
    Long-term debt
 To adjust long-term debt to estimated fair value.
 (i)
    
    Stockholders equity
 The adjustments below are based on the terms of the joint share transfer agreement.
 (i)
    
    Common stock
 To record the common stock issued by JX Holdings of ¥100,000 million, as per its stated
value under the terms of the joint share transfer agreement, reclassify Nippon Oils
historical common stock of ¥139,437 million to capital surplus and to eliminate Nippon
Minings historical common stock of ¥73,920 million.
 (ii)
    
    Capital surplus
 To reclassify Nippon Oils historical common stock of ¥139,437 million, eliminate Nippon
Minings historical capital surplus of ¥315,895 million, and record the  consideration
transferred of ¥431,735 million, net of the stated value of JX Holdings common stock amount
of ¥100,000 million.
 14




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##### Table of Contents



(iii)
    
    Retained earnings
 To eliminate Nippon Minings historical retained earnings.
 (iv)
    
    Accumulated other comprehensive loss
 To eliminate Nippon Minings historical accumulated other comprehensive loss.
 (v)
    
    Treasury stock
 To eliminate Nippon Minings historical treasury stock.
 (j)
    
    Gain on bargain purchase
 The total pro forma consideration transferred of ¥431,735 million as measured under FASB ASC
guidance for Business Combinations was based on the fair value of JX Holdings share price as of
April 1, 2010. The pro forma fair value of net assets acquired was estimated to be
¥648,517 million, which resulted in gain on bargain
purchase of ¥216,782 million. The gain on bargain purchase is presented as a non-recurring adjustment to the pro forma balance
sheet.The gain on bargain purchase represents the difference between the
consideration transferred and total estimated fair value of net assets of Nippon Mining. The
gain on bargain purchase is recognized mainly because the  market share price of JX Holdings, which was
 used to calculate the consideration transferred, was lower than net book value per
share of Nippon Mining. Before recognizing a gain on bargain purchase, Nippon Oil reassessed
whether it had identified all of the assets acquired and all of the liabilities assumed, and
measured all of them at estimated fair value based on ASC guidance for Business Combinations.
 (k)
    
    Noncontrolling interests
 To adjust noncontrolling interests to estimated fair value.
 6.
    
    Pro Forma Statement of Operations Adjustments
 (a)
    
    Property, plant, equipment and oil and natural gas properties, net
 To adjust depreciation expense of property, plant, equipment and oil and natural gas properties
resulting from adjustment to estimated fair value. Oil and natural gas properties and mining
properties are depreciated based on the units of production method. Other property plant and
equipment are depreciated using the straight-line method with estimated useful life of 3 years
to 60 years.
 (b)
    
    Intangible assets
 To record amortization expense related to the intangible assets recognized at estimated fair
value. The estimated amortization period for the intangible assets range from 5 to 17 years.
 (c)
    
    Non-recurring costs
 To eliminate transaction costs incurred during the fiscal year ended March 31, 2010, which are
directly attributable to the joint share transfer transaction but which are not expected to have
a continuing impact on combined companys results of operations.
 (d)
    
    Long-term debt
 To adjust the interest expense on long-term debt recorded at estimated fair value.
 (e)
    
    Income tax expense
 To record an estimate of the tax impacts of the pro forma adjustments to the statement of
operations using a blended tax rate of 46%. Refer to Note 5(c) of the pro forma balance sheet adjustments for
further information.
 (f)
    
    Investment in affiliates
 To adjust equity in earnings of affiliates as it relates to the estimated fair value
adjustments.
 15




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##### Table of Contents



7.
    
    Supplemental Unaudited Pro Forma Combined Quantities of Proved Reserves
 The following supplemental unaudited pro forma combined quantities of proved reserves
information is presented pursuant to the disclosure requirements of FASB ASC guidance for
Extractive Activities  Oil and Gas (formerly Statement of Financial Accounting Standards No. 69)
for illustrative purposes only.Refer to Supplemental Information on Oil and Natural Gas Exploration and Production
Activities (Unaudited) in Nippon Oils consolidated financial statements and Supplemental
Information on Oil Producing Activities (Unaudited) in Nippon Minings consolidated financial
statements, appearing elsewhere in this annual report.The following supplemental unaudited pro forma combined quantities of proved reserves
information and standardized measure of discounted future cash flows present how the oil and
natural gas reserve information and standardized measure of discounted future cash flows of Nippon
Oil and Nippon Mining may have appeared had the businesses actually been combined as of and for the
fiscal year ended March 31, 2010.
 Oil and Natural Gas Reserves
 Nippon Oil
    
    Nippon Mining
    
    Pro Forma CombinedOil and
    
    
    
    
    
    
    
    Natural
    
    Oil and
    
    NaturalNGL
    
    Natural gas
    
    Oil
    
    gas
    
    NGL
    
    gas(Mbbl)
    
    (MMcf)
    
    (Mbbl)
    
    (MMcf)
    
    (Mbbl)
    
    (MMcf)Net proved developed and undeveloped
reserves of consolidated subsidiaries:March 31, 2009
    
    
    44,466
    
    
    
    1,381,584
    
    
    
    
    
    
    
    
    
    
    
    44,466
    
    
    
    1,381,584Revisions
    
    
    6,551
    
    
    
    132,700
    
    
    
    
    
    
    
    
    
    
    
    6,551
    
    
    
    132,700Extensions and discoveries
    
    
    147,193
    
    
    
    69,638
    
    
    
    
    
    
    
    
    
    
    
    147,193
    
    
    
    69,638Production
    
    
    (11,980
    )
    
    
    (182,357
    )
    
    
    
    
    
    
    
    
    
    
    (11,980
    )
    
    
    (182,357
    )March 31, 2010
    
    
    186,230
    
    
    
    1,401,565
    
    
    
    
    
    
    
    
    
    
    
    186,230
    
    
    
    1,401,565Proportional interest in proved reserves
of equity companies:March 31, 2009
    
    
    9,986
    
    
    
    101,266
    
    
    
    23,545
    
    
    
    
    
    
    
    33,531
    
    
    
    101,266Revisions
    
    
    38
    
    
    
    (6,071
    )
    
    
    (150
    )
    
    
    
    
    
    
    (112
    )
    
    
    (6,071
    )Purchases of mineral in place
    
    
    
    
    
    
    
    
    
    
    3,316
    
    
    
    
    
    
    
    3,316
    
    
    
    Extensions and discoveries
    
    
    7,608
    
    
    
    375,207
    
    
    
    
    
    
    
    
    
    
    
    7,608
    
    
    
    375,207Production
    
    
    (1,952
    )
    
    
    (4,097
    )
    
    
    (4,537
    )
    
    
    
    
    
    
    (6,489
    )
    
    
    (4,097
    )March 31, 2010
    
    
    15,680
    
    
    
    466,305
    
    
    
    22,174
    
    
    
    
    
    
    
    37,854
    
    
    
    466,305Total proved reserves as of March 31, 2010
    
    
    201,910
    
    
    
    1,867,870
    
    
    
    22,174
    
    
    
    
    
    
    
    224,084
    
    
    
    1,867,870Proved developed reserves, included
above, as of March 31, 2010Consolidated subsidiaries
    
    
    176,686
    
    
    
    1,011,908
    
    
    
    
    
    
    
    
    
    
    
    176,686
    
    
    
    1,011,908Equity companies
    
    
    6,295
    
    
    
    70,078
    
    
    
    19,469
    
    
    
    
    
    
    
    25,764
    
    
    
    70,078
 16




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##### Table of Contents



Standardized measure of discounted future cash flows
 Nippon
    
    
    NipponOil
    
    
    MiningProportional
    
    
    ProportionalConsolidated
    
    
    interest of equity
    
    
    interest of equity
    
    
    Pro FormaSubsidiaries
    
    
    companies
    
    
    companies
    
    
    Combined(millions of yen)March 31, 2010Future cash inflows
    
    ¥
    1,519,285
    
    
    ¥
    509,297
    
    
    ¥
    135,407
    
    
    ¥
    2,163,989Future production and development costs
    
    
    (954,021
    )
    
    
    (163,049
    )
    
    
    (64,028
    )
    
    
    (1,181,098
    )Future income tax expenses
    
    
    (171,742
    )
    
    
    (100,779
    )
    
    
    (44,370
    )
    
    
    (316,891
    )Future net cash flows
    
    
    393,522
    
    
    
    245,469
    
    
    
    27,009
    
    
    
    666,00010% annual discount for estimated
timing of cash flows
    
    
    (197,609
    )
    
    
    (201,329
    )
    
    
    (7,326
    )
    
    
    (406,264
    )Standardized measure of discounted
future net cash inflows
    
    ¥
    195,913
    
    
    ¥
    44,140
    
    
    ¥
    19,683
    
    
    ¥
    259,736
 SELECTED UNAUDITED PRO FORMA PER SHARE DATA
   EquivalentHistorical
    
    
    Pro Forma
    
    
    Pro FormaNippon
    
    
    Nippon
    
    
    
    
    
    
    NipponOil
    
    
    Mining
    
    
    JX Holdings
    
    
    MiningAs of March 31, 2010Net book value per share (1)
    
    ¥
    612.13
    
    
    ¥
    596.29
    
    
    ¥
    619.70
    
    
    ¥
    619.70For the fiscal year ended March 31, 2010Dividends declared per share (2)
    
    ¥
    18.0
    
    
    ¥
    15.0
    
    
    ¥
    16.1
    
    
    ¥
    16.1Net income per share attributable to
Nippon Oil, Nippon Mining, and Pro
Forma Combined  basic (2)
    
    ¥
    44.81
    
    
    ¥
    53.50
    
    
    ¥
    46.54
    
    
    ¥
    46.54Net income per share attributable to
Nippon Oil, Nippon Mining, and Pro
Forma Combined  diluted (2)
    
    ¥
    44.81
    
    
    ¥
    53.44
    
    
    ¥
    46.52
    
    
    ¥
    46.52
 
 Notes:(1)
    
    Net book value per share information was calculated using the total number of shares
outstanding and pro forma combined total number of shares outstanding as of March 31, 2010.(2)
    
    Historical dividends declared per share and earnings per share information were based on
historical information available elsewhere in this annual report. Pro forma combined dividends
declared per share and pro forma earnings per share were calculated using the pro forma
combined weighted-average number of shares outstanding for the period. 17




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##### Table of Contents



CURRENCY EXCHANGE RATES
  AverageHigh
    
    Low
    
    (of Month-end Rates)
    
    Period-endFiscal Year Ended March 31,2006
    
    ¥
    120.93
    
    
    ¥
    104.41
    
    
    ¥
    113.67
    
    
    ¥
    117.482007
    
    
    121.81
    
    
    
    110.07
    
    
    
    116.55
    
    
    
    117.562008
    
    
    124.09
    
    
    
    96.88
    
    
    
    113.61
    
    
    
    99.852009
    
    
    110.48
    
    
    
    87.80
    
    
    
    100.85
    
    
    
    99.152010
    
    
    100.71
    
    
    
    86.12
    
    
    
    92.49
    
    
    
    93.40Most
Recent Six MonthsJanuary 2010
    
    
    93.31
    
    
    
    89.41
    
    
    
    91.10
    
    
    
    90.38February 2010
    
    
    91.94
    
    
    
    88.84
    
    
    
    90.14
    
    
    
    88.84March 2010
    
    
    93.40
    
    
    
    88.43
    
    
    
    90.72
    
    
    
    93.40April 2010
    
    
    94.51
    
    
    
    92.03
    
    
    
    93.45
    
    
    
    94.24May 2010
    
    
    94.68
    
    
    
    89.89
    
    
    
    91.97
    
    
    
    90.81June 2010
    
    
    92.33
    
    
    
    88.39
    
    
    
    90.81
    
    
    
    88.49July 2010
(through July 2)
    
    
    87.69
    
    
    
    87.42
    
    
    
    87.56
    
    
    
    87.69
 18




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RISK FACTORS
 In addition to the other information included or incorporated by reference into this annual
report, including the matters addressed under the caption Cautionary Statement Concerning
Forward-Looking Statements, you should carefully consider the matters described below in
evaluating the matters described in this annual report.
 Risks Related to Our Ongoing Integration
 JX Holdings may fail to realize the anticipated benefits of the joint share transfer due to the
challenges of integrating the operations of Nippon Oil and Nippon Mining.
  
    
    effectively integrating the respective organizations, business cultures, procedures and
operations of Nippon Oil and Nippon Mining;
    
    identifying and streamlining redundant operations and assets, and combining the product
and service offerings effectively and quickly;
    
    identifying areas and activities that present substantial potential synergies as a
result of the joint share transfer, and allocating resources effectively to those and other
promising areas and activities;
    
    smoothly transitioning relevant operations and facilities to a common information
technology system; and
    
    developing and implementing uniform accounting policies, internal controls and
procedures, disclosure controls and procedures and other governance policies and standards.
  Significant costs are being incurred in the course of the integration of the business operations
of Nippon Oil and Nippon Mining.
  Uncertainties associated with JX Holdings as a new owner may damage JX Holdings relationships
with customers, suppliers and business partners of Nippon Oil and Nippon Mining.
  19




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Negative media coverage of the joint share transfer, as well as statements by parties with
competing interests, could have a materially adverse effect on JX Holdings reputation, business
and results of operations.
  JX Holdings is a holding company and its ability to meet its obligations depends upon the results
of operations from its subsidiaries. JX Holdings ability to pay dividends is also restricted by
statutory provisions.
    A successful legal challenge to the validity of the joint share transfer following its completion
may invalidate the shares of JX Holdings issued in the joint share transfer.
  Risks Relating to JX Holdings Business
 JX Holdings may not achieve the targets set forth in its management plans due to changes in
economic and business conditions.
  20




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Prices for commodities, including prices for crude oil, natural gas and copper, may fluctuate and
JX Holdings may not be adequately hedged, which may adversely affect JX Holdings financial
condition and results of operations.
    Prices for JX Holdings products such as refined petroleum products, petrochemicals and fabricated
metals may fluctuate significantly, resulting in volatile margins for its products, and JX
Holdings may be unable to pass along higher production costs to customers.
    21




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Because most of JX Holdings sales are concentrated in Japan, adverse economic conditions and
energy-conservation trends in Japan may negatively affect JX Holdings financial condition and
results of operations.
    Because sales of some products in China and other Asian countries are significant, adverse
economic conditions in those regions may negatively affect JX Holdings financial condition and
results of operations.
  The failure or poor performance of overseas strategic alliances or investments may prevent JX
Holdings from realizing the benefits of its growth strategy.
  JX Holdings financial condition and results of operations may be adversely affected by risks and
uncertainties relating to the foreign jurisdictions in which it sources raw materials.
  22




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JX Holdings business may be adversely affected by existing or future environmental regulations.
  
    
    restrictions on, or imposition of fees for, the discharge of waste substances or for
cleanup costs, including with respect to soil contamination, wastewater, gas or solid waste
materials;
    
    levy of fines and payment of damages for serious environmental offenses;
    
    closure of any facility which fails to comply with regulatory orders, or fails to
correct or halt operations causing environmental damage; and
    
    mandatory contributions to the International Oil Pollution Compensation (the IOPC)
Funds.
    JX Holdings faces operating risks that may cause significant business interruptions.
   JX Holdings financial condition and results of operations may be adversely affected by
fluctuations in foreign exchange rates.
  23




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The petroleum refining and marketing business is highly competitive and JX Holdings faces intense
competition.
  Any failure by JX Holdings to protect its intellectual property rights from infringement or
obsolescence risks may adversely affect its business and competitive position.
  JX Holdings businesses may be harmed by misappropriation of customers personal information or
proprietary data.
  JX Holdings may not be successful in attracting and retaining sufficient skilled exploration and
production engineers.
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The future performance of JX Holdings will be affected by its ability to find or acquire rights to
additional oil and natural gas reserves that are economically recoverable.
    Oil, natural gas and ore reserves data are only estimates, and JX Holdings future production may
differ materially from estimated reserves.
  The development of oil, natural gas and mineral resources is subject to substantial uncertainties,
and requires significant capital investments.
  25




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The high cost or unavailability of drilling rigs, equipment, supplies and oil field services could
adversely affect JX Holdings ability to execute its exploration and production plans on a timely
basis and within its budget.
  As a custom smelter, JX Holdings is exposed to various factors beyond its control that may
adversely affect its margins in the copper smelting and refining business.
     International competition for copper concentrate is increasing, and failure to procure a stable
supply of such concentrate could have a material adverse effect on JX Holdings business and
results of operations.
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Demand for electronic materials is dependent upon technological developments, and the market for
electronic materials is highly competitive.
   JX Holdings construction business is reliant on trends in public spending and private capital
investment.
  The titanium business is reliant on specialized demand, and its results may be negatively affected
by demand volatility.
  Risks of Owning the Shares
 Japans unit share system imposes restrictions on the rights of holders of shares of JX Holdings
common stock that do not constitute a unit.
  Rights of shareholders under Japanese law may be more limited than under the laws of other
jurisdictions.
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It may not be possible for investors to effect service of process within the United States
upon JX Holdings directors, senior management or corporate auditors, or to enforce against JX
Holdings or those persons judgments obtained in U.S. courts predicated upon the civil liability
provisions of the federal securities laws of the United States.
  Because of daily price range limitations under Japanese stock exchange rules, you may not be able
to sell JX Holdings shares at a particular price on any particular trading day, or at all.
  JX
Holdings will likely cease to be a reporting company under the
Exchange Act as soon as practicable in accordance with applicable rules and regulations.
  28




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Item 4.
    
    Information on the Company
 BUSINESS OF JX HOLDINGS
 Introduction
   Formation of JX Holdings
     
    
    Issued and outstanding shares of Nippon Oil common stock were exchanged for shares of
common stock of JX Holdings at the ratio of 1.07 JX Holdings shares for each share of
Nippon Oil;
    
    Issued and outstanding shares of Nippon Mining common stock were exchanged for shares of
common stock of JX Holdings at the ratio of 1.00 JX Holdings share for each share of Nippon
Mining;
    
    Shareholders of Nippon Oil and Nippon Mining whose names appeared in the registers of
shareholders of the two companies as of March 31, 2010 were allocated shares of JX Holdings
in numbers based on the ratios described above, and these numbers (excluding fractional
shares of JX Holdings common stock) were reflected in the JX Holdings register of
shareholders; and
    
    Fractional shares of JX Holdings that would otherwise have been allocated to former
shareholders of Nippon Oil were instead sold in the aggregate in the Japanese market or
bought by JX Holdings, with the net cash proceeds distributed on a proportionate basis to
the former shareholders of Nippon Oil common stock who would have otherwise received such
fractional shares.
  29




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Business Goals and Strategies
   
    
    strengthening competitiveness as a leading integrated energy, resources and materials
industrial group;
    
    enhancing corporate value by focusing management resources on the most profitable
business areas;
    
    restructuring and streamlining petroleum refining and marketing businesses; and
    
    creating synergies from the business integration.
  
  
    
    Petroleum Refining & Marketing. A core operating subsidiary, JX Nippon Oil &
Energy Corporation, was established by combining the refining and marketing business of Nippon Oil,
Nippon Petroleum Refining and Japan Energy Corporation.
    
    Oil and Natural Gas E&P. A core operating subsidiary, JX Nippon Oil & Gas
Exploration Corporation, was established through the merger of Nippon Oil Exploration
Limited, a wholly owned subsidiary of Nippon Oil, and Japan Energy Development Co., Ltd., a
wholly owned subsidiary of Japan Energy. Prior to the merger with Japan Energy Development,
the oil and natural gas exploration and production operation of
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the merged entity of Nippon
Oil, Nippon Petroleum Refining and Japan Energy was transferred to Nippon Oil
Exploration.
 
    
    Metals. A core operating subsidiary, JX Nippon Mining
& Metals Corporation, was established
after Nippon Mining and Nippon Mining & Metals Co., Ltd. merged.
    
    
    Petroleum Refining & Marketing. To establish a stable revenue system and
realize significant competitive advantages through the implementation of business changes.
JX Holdings intends to increase
petrochemicals production, to expand business overseas and to move ahead in fuel cells and
developing new energy and other businesses with the aim of emerging as an integrated energy
enterprise that can respond to its customers needs.JX Holdings intends to decrease refining capacity in light of expected future decreases in
the domestic demand for petroleum products, to realize integration synergies in refining,
crude oil procurement and other areas and to enhance the efficiency of its refineries. By
March 31, 2011, JX Holdings intends to reduce refining capacity by 400,000 barrels per day
from Nippon Oils and Nippon Minings aggregate refining capacity as of December 4, 2008.
In addition, JX Holdings intends to reduce refining capacity by a further 200,000 barrels
per day by March 31, 2014.JX Holdings intends to reorganize and consolidate its service stations under Nippon Oils
existing ENEOS brand name in order to enhance the efficiency of its distribution network.
Credit cards issued under Japan Energys JOMO service station brand name will also be
consolidated under the ENEOS brand name.JX Holdings plans to continue to focus on supplying competitive products such as its
environmentally friendly premium gasoline called ENEOS NEW VIGO, which reduces friction
inside engines to enhance both fuel economy and acceleration. The improved engine-cleaning
capabilities of this gasoline help reduce the levels of regulated substances found in
exhaust gases.
 
    
    Oil and Natural Gas E&P. To become a global oil and natural gas exploration and
production company with stable revenue levels by actively making investments while
practicing thorough risk management.JX Holdings intends to replace and expand reserves, primarily through exploration, to pursue
additional development projects, with a focus on core countries of operation which include
Vietnam, Malaysia and the United Kingdom (North Sea), and to use new technologies, by
applying the experience it has obtained in operating oil fields and by using technologies to
enhance oil recovery. Furthermore, JX Holdings intends to focus management resources on core
candidate countries, including Papua New Guinea, Indonesia, Abu Dhabi and Qatar.
 
    
    Metals. To promote mining development and build a global, integrated
operational framework balanced with smelting and refining. JX Holdings plans to increase
its equity entitlements in copper mine
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production, including through the planned
development of the Caserones copper and molybdenum deposits in Chile, and to focus on the
development of new copper-refining technology, such as Nippon Minings proprietary
hydrometallurgical refining process, called the Nikko Chloride Process.
 JX Holdings aims to strengthen its position in the development of electronic materials,
metal manufacturing and the recycling and environmental services businesses, where it
expects high growth in the future. In the electronic materials business, JX Holdings aims to
increase sales of treated rolled copper foil products and of precision rolled products. In
the recycling and environmental services business, JX Holdings intends to have the Hitachi
Metal Recycling Complex begin full operation.
 Material
Commitments for Capital Expenditures
   Investment Amount(Planned)Amount of
    
    
    
    Actual or
    
    EstimatedIntended Facility
    
    
    
    
    
    Expenditure
    
    Method of
    
    Estimated
    
    CompletionSegment
    
    Property
    
    Use
    
    Total
    
    Already Paid
    
    Financing
    
    Start Date
    
    Date(Millions of yenor U.S. dollars)Petroleum
refining & marketing
    
    
    
    Construction and renovation of
service stations
    
    ¥
    4,920
    
    
    
    
    
    
    Equity capital, corporate bonds, borrowings
    
    Ongoing
    
    Petroleum
refining & marketing
    
    
    
    Renovation of oil terminals
    
    ¥
    93
    
    
    
    
    
    
    Equity capital,  corporate bonds, borrowings
    
    Ongoing
    
    Metals
    
    Saganoseki Smelter & Refinery
    
    Copper smelting & refining
    
    ¥
    6,500
    
    
    
    
    
    
    Equity capital, corporate bonds, borrowings
    
    Ongoing
    
    Metals
    
    Caserones copper & molybdenum deposits
    
    Copper & molybdenum mining
    
    $
    2,000
    
    
    
    
    
    
    Equity capital, corporate bonds, borrowings
    
    March 2010
    
    December 2013
 Intellectual Property
  Oil and Petrochemical Alliances
  Domestic Alliances
 Idemitsu
  32




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Cosmo Oil
  INPEX
  Overseas Alliances
 SK Energy
  CNPC
  Seasonality
  Government Regulations
  
    
    Law Regarding Stockpiling, etc. of Petroleum:a law designed to secure the
stable supply of petroleum in Japan in case of any shortage in the supply of petroleum into
Japan. The law and related regulations provide measures for the stockpiling of crude oil
and refined petroleum products amounting to 70 days equivalent of oil an oil company (in
the case of JX Holdings, each of Nippon Oil and Japan Energy) sold in Japan in the past 12
months. Under the law, JX Holdings is subject to a range of powers of the Ministry of
Economy, Trade and Industry of Japan (METI), including the power to inspect and to
require the submission of reports and information.
    
    Gas Business Act: a law designed to protect the interests of gas users, to
achieve the sound development of gas businesses, to ensure public safety and to prevent
pollution by regulating the construction, maintenance and operation of gas facilities as
well as the manufacturing and sale of gas equipment. As a gas business operator, JX
Holdings is subject to various regulations, such as requirements to keep business records,
to report supply plans regarding gases to METI and to maintain appropriate gas facilities.
    
    Electricity Business Act: a law designed to protect the interests of
electricity users, to achieve the sound development of electricity businesses and to ensure
public safety and prevent pollution by regulating the construction, maintenance and
operation of electric facilities. Regulations are also provided to prepare safety
regulations for the construction, maintenance and operation of electric facilities at
refineries and other plants, to appoint chief engineers who supervise the safety of the
construction, maintenance and operation of such electric facilities and to set
qualifications for chief electricity engineers. In addition, as an
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electricity supplier for
wholesale or specified large-scale demand, JX Holdings is subject to the power of METI to
regulate price and other terms and conditions of electricity supply transactions, as well
as the power to order the amendment of trade terms if such terms and conditions could
hinder the promotion of the public interest due to changes in social and economic
circumstances.
 
    
    Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture,
etc.: a law designed to regulate the manufacturing, importing and use, etc., of
chemical substances to prevent environmental pollution. As a manufacturer and importer of
certain specified chemical substances under the law, JX Holdings is subject to a range of
powers of METI, including the power to issue improvement orders and business suspension
orders, to rescind permissions, to require the submission of reports and information and to
conduct on-site inspections.
    
    Act Concerning the Maintenance of Quality of Gasoline, etc.: under this act,
businesses that import, produce and distribute gasoline and other petroleum products are
responsible for maintaining a prescribed product quality  from the import, production and
processing of the petroleum products to its distribution.
    
    Fire Service Act: the production, storage, transportation and handling of
dangerous material, including crude oil and oil products, requires permission from an
administrative agency. Oil refineries and service stations in Japan must fulfill strict
safety requirements, such as meeting technical standards for facilities and maintaining a
safety system in order to obtain such permission. Moreover, they are also required to
establish a private fire prevention organization in preparation for any disaster.
    
    High Pressure Gas Safety Act: the production and storage of high pressure gas,
including LPG, comes under a permit system administered by prefectural governors. Every oil
refinery in Japan is subject to this act. In order to obtain a permit to produce and store
high pressure gas, oil refineries must fulfill strict safety requirements, such as meeting
technical standards for facilities and storage and maintaining a safety system, and undergo
inspections. However, there is an accreditation system in place that allows those oil
refineries that excel at maintaining safety systems to perform their own safety and
completion inspections. All of JX Holdings oil refineries have received this
accreditation.
    
    Act on the Prevention of Disaster in Petroleum Industrial Complexes and Other
Petroleum Facilities: this act designates petroleum industrial complexes as special
disaster prevention zones, and requires those businesses to implement special
countermeasures to prevent the outbreak of disasters and to mitigate disasters that have
already occurred in those zones. Businesses within the zones must establish special
disaster prevention facilities and a private disaster prevention organization. They are
also subject to layout regulations for the positioning of facilities within the zones and
to secure roads and passageways for firefighting vehicles and evacuation.
    
    Construction Business Act: under this act, any person or company that intends
to operate a construction business is required to obtain authorization to conduct a
construction business from the Minister of the Ministry of Land, Infrastructure, Transport
and Tourism (MLIT) or the governor of the municipal government of the relevant
prefecture. This act imposes various obligations on construction operators, such as the
obligation to not subcontract their work in entirety, regardless of the method of
subcontracting. It also regulates the timing of payment to subcontractors, among other
things.
    
    Industrial Safety and Health Act: in order to install boilers (including class
one pressure vessels), oil refineries must notify a labor standards officer and obtain an
inspection certificate. This inspection certificate must be renewed through performance
inspections conducted by the administrative agency. However, there is an accreditation
system in place that allows oil refineries that excel at maintaining safety systems to
continuously operate. All of JX Holdings oil refineries have received this accreditation.
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Environmental Matters
   
    
    Law Prohibiting Air Pollution: under this law, JX Holdings must limit its
emission of harmful gases in accordance with standards set by the Ministry of Environment.
JX Holdings is required to indemnify aggrieved parties against damages and losses caused by
its emission of harmful gases irrespective of its fault.
    
    Soil Contamination Countermeasures Act: under this act, owners of land with gas
stations or similar facilities must survey their soil to determine the presence of
hazardous substances such as lead, arsenic and benzene, and take steps to remove any such
contamination, as required.
    
    Law Prohibiting Water Pollution: under this law, JX Holdings is required to
limit its discharge of wastewater in accordance with standards set forth by the Ministry of
Environment. JX Holdings is required
to indemnify aggrieved parties against damages and losses caused by its discharge of
wastewater irrespective of its fault.
    
    Law Regarding Emissions Management and Improvement of Designated Petrochemicals
(PRTR Law): under this law, JX Holdings, as an operator dealing with chemical
materials designated by the law, must notify the government of its emission and shipment
amounts of those designated chemical materials every year.
    
    Law Regarding Cleanup and Disposal of Waste Materials: under this law, any
person or company doing business is required to dispose of industrial wastes by itself or
delegate an authorized waste disposer to dispose of the waste in accordance with the
relevant government standards.
    
    Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA): a law granting the U.S. federal government broad authority to respond
directly to releases or threatened releases of hazardous substances that may endanger
public health or the environment. CERCLA, commonly known as Superfund, establishes
prohibitions and requirements concerning closed and abandoned hazardous waste sites and
provides for liability of persons responsible for releases of hazardous waste at these
sites. CERCLA also establishes a trust fund to provide for cleanup when no responsible
party can be identified.
  35




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36




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##### Table of Contents



BUSINESS OF NIPPON OIL
 Introduction
  History and Development
     Business Overview
  
    
    refining and marketing;
    
    oil and natural gas exploration and production (E&P);
    
    construction; and
    
    other operations.
      Fiscal Year Ended March 31,2010
    
    2009Percentages of
    
    
    
    
    
    Percentages ofRevenues
    
    Total Revenues
    
    Revenues
    
    Total Revenues(Millions of yen except percentages)Refining and Marketing
    
    ¥
    5,192,419
    
    
    
    89.9
    
    
    ¥
    6,760,526
    
    
    
    91.5Oil and Natural Gas E&P
    
    
    143,432
    
    
    
    2.5
    
    
    
    218,623
    
    
    
    3.0Construction
    
    
    377,436
    
    
    
    6.5
    
    
    
    356,540
    
    
    
    4.8Other
    
    
    60,992
    
    
    
    1.1
    
    
    
    53,545
    
    
    
    0.7Total
    
    ¥
    5,774,279
    
    
    
    100.0
    
    
    ¥
    7,389,234
    
    
    
    100.0
  37




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##### Table of Contents



Fiscal Year Ended March 31,2010
    
    2009Percentage of
    
    
    
    
    
    Percentages ofRevenues
    
    Total Revenues
    
    Revenues
    
    Total Revenues(Millions of yen except percentages)Japan
    
    ¥
    4,356,108
    
    
    
    87.4
    
    
    ¥
    5,529,867
    
    
    
    86.8Overseas
    
    
    625,173
    
    
    
    12.6
    
    
    
    838,557
    
    
    
    13.2Total
    
    ¥
    4,981,281
    
    
    
    100.0
    
    
    ¥
    6,368,424
    
    
    
    100.0
 Refining and Marketing
 Overview
     Oil Refineries, Petrochemical Plant and Lubricant-Manufacturing Facilities
 Oil Refineries
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##### Table of Contents



As of and for the Fiscal Year Ended March 31,2010
    
    2009Capacity (Thousand
    
    Utilization Rate
    
    Capacity (Thousand
    
    Utilization Ratebarrels per day)
    
    (Percentage)
    
    barrels per day)
    
    (Percentage)Muroran
    
    
    180
    
    
    
    72
    
    
    
    180
    
    
    
    86Sendai
    
    
    145
    
    
    
    81
    
    
    
    145
    
    
    
    75Negishi
    
    
    340
    
    
    
    80
    
    
    
    340
    
    
    
    76Osaka(1)
    
    
    115
    
    
    
    89
    
    
    
    115
    
    
    
    87Mizushima
    
    
    250
    
    
    
    58
    
    
    
    250
    
    
    
    81Marifu
    
    
    127
    
    
    
    78
    
    
    
    127
    
    
    
    77Oita
    
    
    160
    
    
    
    75
    
    
    
    160
    
    
    
    76
    (2)Toyama
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    53
    (3)Total
    
    
    1,317
    
    
    
    75
    
    
    
    1,377
    
    
    
    78
    (2)(3)
 
 (1)
    
    The Osaka Refinery is expected to be operated by a joint
venture company with CNPC Group planned to be established
 on October 1, 2010.(2)
    
    Nippon Oil acquired the Oita Refinery in October 2008. For the fiscal year ended March 31,
2009, the utilization rate for Oita and the total utilization rate therefore reflect only the
utilization rate of the Oita Refinery from the date of acquisition through the fiscal year
end.(3)
    
    The Toyama Refinery terminated refining operations at the end of January 2009 and was
converted into an oil terminal in April 2009. The utilization rate of the Toyama Refinery and
the total utilization rate for the fiscal year ended March 31, 2009 therefore reflect only the
utilization rate of the Toyama Refinery until January 31, 2009.       39




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##### Table of Contents



Petrochemical Plant
  Lubricant-Manufacturing Facilities
  Other Facilities
  Gas, Power, Coal and Renewables
   Suppliers
   Stockpile
  40




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##### Table of Contents



Transportation
  Sales and Distribution
  Fiscal Year Ended March 31,2010
    
    2009(Million kiloliters exceptpetrochemicals, LPG and coal, whichare in million tons)Gasoline
    
    
    14.3
    
    
    
    13.4Naphtha
    
    
    1.8
    
    
    
    1.9Jet fuel
    
    
    1.3
    
    
    
    1.2Kerosene
    
    
    6.0
    
    
    
    5.2Gas oil
    
    
    8.2
    
    
    
    8.0Fuel oil A
    
    
    5.0
    
    
    
    5.1Fuel oil C
    
    
    5.1
    
    
    
    7.4Subtotal of domestic fuel
    
    
    41.7
    
    
    
    42.1Crude oil
    
    
    1.1
    
    
    
    2.4Total
    
    
    42.8
    
    
    
    44.5Lubricants and specialty products
    
    
    2.2
    
    
    
    2.2Petrochemicals
    
    
    4.1
    
    
    
    3.5Fuel for export
    
    
    6.9
    
    
    
    8.8LPG
    
    
    1.8
    
    
    
    2.0Coal
    
    
    4.4
    
    
    
    4.9
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##### Table of Contents



Oil and Natural Gas E&P
 Reserves
 Summary of Oil and Gas Reserves at Year Ended March 31, 2010
   Oil-EquivalentOil and NGL
    
    Synthetic Oil
    
    Natural Gas
    
    Basis(Mbbl)
    
    (Mbbl)
    
    (MMcf)
    

(Mboe)Proved reservesDevelopedConsolidated subsidiariesUnited States
    
    
    6,271
    
    
    
    -
    
    
    
    70,891
    
    
    
    18,086Canada
    
    
    -
    
    
    
    143,999
    
    
    
    -
    
    
    
    143,999United Kingdom
    
    
    9,878
    
    
    
    -
    
    
    
    45,285
    
    
    
    17,426Southeast Asia
    
    
    16,141
    
    
    
    -
    
    
    
    895,732
    
    
    
    165,430Oceania
    
    
    397
    
    
    
    -
    
    
    
    -
    
    
    
    397Total consolidated subsidiaries
    
    
    32,687
    
    
    
    143,999
    
    
    
    1,011,908
    
    
    
    345,338Equity companiesSoutheast Asia
    
    
    1,254
    
    
    
    -
    
    
    
    70,078
    
    
    
    12,934Oceania
    
    
    5,041
    
    
    
    -
    
    
    
    -
    
    
    
    5,041Total equity companies
    
    
    6,295
    
    
    
    -
    
    
    
    70,078
    
    
    
    17,975Total developed
    
    
    38,982
    
    
    
    143,999
    
    
    
    1,081,986
    
    
    
    363,313UndevelopedConsolidated subsidiariesUnited States
    
    
    5,713
    
    
    
    -
    
    
    
    10,910
    
    
    
    7,531United Kingdom
    
    
    178
    
    
    
    -
    
    
    
    26
    
    
    
    182Southeast Asia
    
    
    3,653
    
    
    
    -
    
    
    
    378,721
    
    
    
    66,773Total consolidated subsidiaries
    
    
    9,544
    
    
    
    -
    
    
    
    389,657
    
    
    
    74,486Equity companiesSoutheast Asia
    
    
    297
    
    
    
    -
    
    
    
    21,020
    
    
    
    3,800Oceania
    
    
    9,088
    
    
    
    -
    
    
    
    375,207
    
    
    
    71,623Total equity companies
    
    
    9,385
    
    
    
    -
    
    
    
    396,227
    
    
    
    75,423Total undeveloped
    
    
    18,929
    
    
    
    -
    
    
    
    785,884
    
    
    
    149,909Total proved reserves
    
    
    57,911
    
    
    
    143,999
    
    
    
    1,867,870
    
    
    
    513,222
 42




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##### Table of Contents



Preparation of Reserves Estimates
   Proved Undeveloped Reserves
   43




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##### Table of Contents



Oil and Gas Production, Production Prices and Production Costs
 Oil and Gas Production
  Year Ended March 312010
    
    2009
    
    2008(thousands of barrels daily)Oil and NGL productionConsolidated subsidiariesUnited States
    
    
    4
    
    
    
    4
    
    
    
    6United Kingdom
    
    
    9
    
    
    
    7
    
    
    
    6Malaysia
    
    
    7
    
    
    
    8
    
    
    
    9Indonesia
    
    
    1
    
    
    
    -
    
    
    
    -Other countries in Southeast Asia
    
    
    7
    
    
    
    9
    
    
    
    8Oceania
    
    
    2
    
    
    
    3
    
    
    
    6Total consolidated subsidiaries
    
    
    30
    
    
    
    31
    
    
    
    35Equity companiesSoutheast Asia
    
    
    *
    2
    
    
    *
    2
    
    
    *
    2Oceania
    
    
    5
    
    
    
    3
    
    
    
    2Total equity companies
    
    
    5
    
    
    
    3
    
    
    
    2Total oil and NGL production
    
    
    35
    
    
    
    34
    
    
    
    37Synthetic oil productionConsolidated subsidiariesCanada*1
    
    
    14Total synthetic oil production
    
    
    14(millions of cubic feet daily)Natural gas productionConsolidated subsidiariesUnited States
    
    
    44
    
    
    
    32
    
    
    
    47United Kingdom
    
    
    21
    
    
    
    20
    
    
    
    20Malaysia
    
    
    379
    
    
    
    272
    
    
    
    505Indonesia
    
    
    46
    
    
    
    -
    
    
    
    -Other countries in Southeast Asia
    
    
    17
    
    
    
    16
    
    
    
    13Total consolidated subsidiaries
    
    
    507
    
    
    
    340
    
    
    
    585Equity companiesSoutheast Asia
    
    
    11
    
    
    
    23
    
    
    
    28Total equity companies
    
    
    11
    
    
    
    23
    
    
    
    28Total natural gas production
    
    
    518
    
    
    
    363
    
    
    
    613(thousands of oil-equivalent barrels daily)Oil-equivalent production
    
    
    135
    
    
    
    95
    
    
    
    139
 
 *1
    
    Includes production from January through March 2010.*2
    
    The daily production was less than one thousand of barrels. 44




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##### Table of Contents



Production Prices and Production Costs
  United
    
    
    
    
    
    United
    
    SoutheastStates
    
    Canada*
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalYear ended March 31, 2010Consolidated subsidiariesAverage production pricesOil and NGL, per barrel
    
    ¥
    5,935
    
    
    ¥
    -
    
    
    ¥
    6,168
    
    
    ¥
    6,509
    
    
    ¥
    6,783
    
    
    ¥
    6,355Natural gas, per
thousand cubic feet
    
    
    388
    
    
    
    -
    
    
    
    496
    
    
    
    214
    
    
    
    -
    
    
    
    247Synthetic oil, per barrel
    
    
    -
    
    
    
    5,930
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    5,930Average production costs,
per barrel-total
    
    
    3,059
    
    
    
    4,043
    
    
    
    3,448
    
    
    
    1,053
    
    
    
    5,693
    
    
    
    1,748Equity companiesAverage production pricesOil and NGL, per barrel
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4,955
    
    
    
    6,096
    
    
    
    5,975Natural gas, per
thousand cubic feet
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    813
    
    
    
    -
    
    
    
    813Average production costs,
per barrel-total
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,812
    
    
    
    2,327
    
    
    
    2,131TotalAverage production pricesOil and NGL, per barrel
    
    
    5,935
    
    
    
    -
    
    
    
    6,168
    
    
    
    6,428
    
    
    
    6,244
    
    
    
    6,274Natural gas, per
thousand cubic feet
    
    
    388
    
    
    
    -
    
    
    
    496
    
    
    
    248
    
    
    
    -
    
    
    
    274Synthetic oil, per barrel
    
    
    -
    
    
    
    5,930
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    5,930Average production costs,
per barrel-total
    
    
    3,059
    
    
    
    4,043
    
    
    
    3,448
    
    
    
    1,096
    
    
    
    3,048
    
    
    
    1,787Year ended March 31, 2009Consolidated subsidiariesAverage production pricesOil and NGL, per barrel
    
    ¥
    10,424
    
    
    
    
    
    
    ¥
    9,553
    
    
    ¥
    12,676
    
    
    ¥
    9,976
    
    
    ¥
    11,215Natural gas, per
thousand cubic feet
    
    
    880
    
    
    
    
    
    
    
    824
    
    
    
    320
    
    
    
    -
    
    
    
    406Average production costs,
per barrel-total
    
    
    6,612
    
    
    
    
    
    
    
    3,444
    
    
    
    1,772
    
    
    
    8,394
    
    
    
    2,704Equity companiesAverage production pricesOil and NGL, per barrel
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    8,687
    
    
    
    9,261
    
    
    
    9,111Natural gas, per
thousand cubic feet
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    916
    
    
    
    -
    
    
    
    916Average production costs,
per barrel-total
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    2,173
    
    
    
    5,599
    
    
    
    3,443TotalAverage production pricesOil and NGL, per barrel
    
    
    10,424
    
    
    
    
    
    
    
    9,553
    
    
    
    12,454
    
    
    
    9,627
    
    
    
    11,009Natural gas, per
thousand cubic feet
    
    
    880
    
    
    
    
    
    
    
    824
    
    
    
    354
    
    
    
    -
    
    
    
    431Average production costs,
per barrel-total
    
    
    6,612
    
    
    
    
    
    
    
    3,444
    
    
    
    1,795
    
    
    
    7,027
    
    
    
    2,752Year ended March 31, 2008Consolidated subsidiariesAverage production pricesOil and NGL, per barrel
    
    ¥
    7,808
    
    
    
    
    
    
    ¥
    7,860
    
    
    ¥
    8,532
    
    
    ¥
    9,461
    
    
    ¥
    8,452Natural gas, per
thousand cubic feet
    
    
    794
    
    
    
    
    
    
    
    935
    
    
    
    319
    
    
    
    -
    
    
    
    409Average production
costs, per barrel-total
    
    
    5,120
    
    
    
    
    
    
    
    2,960
    
    
    
    1,239
    
    
    
    3,882
    
    
    
    2,066Equity companiesAverage production pricesOil and NGL, per barrel
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    8,117
    
    
    
    9,347
    
    
    
    8,972Natural gas, per
thousand cubic feet
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    810
    
    
    
    -
    
    
    
    810Average production
costs, per barrel-total
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    2,223
    
    
    
    4,070
    
    
    
    2,829TotalAverage production pricesOil and NGL, per barrel
    
    
    7,808
    
    
    
    
    
    
    
    7,860
    
    
    
    8,508
    
    
    
    9,434
    
    
    
    8,494Natural gas, per
thousand cubic feet
    
    
    794
    
    
    
    
    
    
    
    935
    
    
    
    345
    
    
    
    -
    
    
    
    427Average production
costs, per barrel-total
    
    
    5,120
    
    
    
    
    
    
    
    2,960
    
    
    
    1,292
    
    
    
    3,928
    
    
    
    2,109
  45




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##### Table of Contents



Drilling and Other Exploratory and Development Activities
 Number of Net Productive and Dry Wells Drilled
 Year Ended March 312010
    
    2009
    
    2008Net productive exploratory wells drilledConsolidated subsidiariesUnited States
    
    
    2
    
    
    
    3
    
    
    
    4Canada
    
    
    -
    
    
    
    -
    
    
    
    -United Kingdom
    
    
    -
    
    
    
    *
    
    
    
    -Southeast Asia
    
    
    1
    
    
    
    -
    
    
    
    1Oceania
    
    
    -
    
    
    
    1
    
    
    
    -Other
    
    
    -
    
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    3
    
    
    
    4
    
    
    
    5Equity companiesSoutheast Asia
    
    
    -
    
    
    
    -
    
    
    
    -Oceania
    
    
    *
    
    
    
    -
    
    
    
    *Total equity companies
    
    
    *
    
    
    
    -
    
    
    
    *Total productive exploratory wells drilled
    
    
    3
    
    
    
    4
    
    
    
    5Net dry exploratory wells drilledConsolidated subsidiariesUnited States
    
    
    -
    
    
    
    *
    
    
    
    *Canada
    
    
    -
    
    
    
    -
    
    
    
    -United Kingdom
    
    
    1
    
    
    
    1
    
    
    
    -Southeast Asia
    
    
    -
    
    
    
    1
    
    
    
    -Oceania
    
    
    -
    
    
    
    *
    
    
    
    *Other
    
    
    *
    
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    1
    
    
    
    2
    
    
    
    *Equity companiesSoutheast Asia
    
    
    -
    
    
    
    *
    
    
    
    -Oceania
    
    
    *
    
    
    
    -
    
    
    
    *Total equity companies
    
    
    *
    
    
    
    *
    
    
    
    *Total dry exploratory wells drilled
    
    
    1
    
    
    
    2
    
    
    
    *Net productive development wells drilledConsolidated subsidiariesUnited States
    
    
    3
    
    
    
    3
    
    
    
    4Canada
    
    
    -
    
    
    
    -
    
    
    
    -United Kingdom
    
    
    1
    
    
    
    1
    
    
    
    *Southeast Asia
    
    
    2
    
    
    
    8
    
    
    
    5Oceania
    
    
    -
    
    
    
    *
    
    
    
    -Other
    
    
    -
    
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    6
    
    
    
    12
    
    
    
    9Equity companiesSoutheast Asia
    
    
    *
    
    
    
    -
    
    
    
    -Oceania
    
    
    *
    
    
    
    *
    
    
    
    -Total equity companies
    
    
    *
    
    
    
    *
    
    
    
    -Total productive development wells drilled
    
    
    6
    
    
    
    12
    
    
    
    9Net dry development wells drilledConsolidated subsidiariesUnited States
    
    
    2
    
    
    
    1
    
    
    
    2Canada
    
    
    -
    
    
    
    -
    
    
    
    -United Kingdom
    
    
    -
    
    
    
    -
    
    
    
    *Southeast Asia
    
    
    -
    
    
    
    *
    
    
    
    -Oceania
    
    
    -
    
    
    
    -
    
    
    
    *Other
    
    
    -
    
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    2
    
    
    
    1
    
    
    
    2Equity companiesSoutheast Asia
    
    
    -
    
    
    
    -
    
    
    
    -Oceania
    
    
    -
    
    
    
    -
    
    
    
    -Total equity companies
    
    
    -
    
    
    
    -
    
    
    
    -Total dry development wells drilled
    
    
    2
    
    
    
    1
    
    
    
    2Total number of net wells drilled
    
    
    12
    
    
    
    19
    
    
    
    16
  46




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##### Table of Contents



Exploratory and Development Activities Regarding Oil and Gas Resource Extracted by Mining
Technologies
  Present Activities
 Wells Drilling
 Year Ended March 31, 2010Gross
    
    NetWells drillingConsolidated subsidiariesUnited States
    
    
    -
    
    
    
    -Canada
    
    
    -
    
    
    
    -United Kingdom
    
    
    2
    
    
    
    1Southeast Asia
    
    
    1
    
    
    
    *Oceania
    
    
    -
    
    
    
    -Other
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    3
    
    
    
    1Equity companiesSoutheast Asia
    
    
    -
    
    
    
    -Oceania
    
    
    -
    
    
    
    -Total equity companies
    
    
    -
    
    
    
    -Total gross and net wells drilling
    
    
    3
    
    
    
    1
  47




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##### Table of Contents



Review of Principal Ongoing Activities
                  48




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##### Table of Contents



Delivery Commitments
  49




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##### Table of Contents



Oil and Gas Properties, Wells, Operations and Acreage
 Gross and Net Productive Wells
 Year Ended March 31, 2010Oil
    
    GasGross
    
    Net
    
    Gross
    
    NetGross and net productive wellsConsolidated subsidiariesUnited States
    
    
    117
    
    
    
    52
    
    
    
    225
    
    
    
    154Canada
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -United Kingdom
    
    
    76
    
    
    
    5
    
    
    
    19
    
    
    
    1Southeast Asia
    
    
    46
    
    
    
    22
    
    
    
    44
    
    
    
    20Oceania
    
    
    5
    
    
    
    1
    
    
    
    -
    
    
    
    -Other
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    244
    
    
    
    80
    
    
    
    288
    
    
    
    175Equity companiesSoutheast Asia
    
    
    -
    
    
    
    -
    
    
    
    7
    
    
    
    1Oceania
    
    
    29
    
    
    
    6
    
    
    
    -
    
    
    
    -Total equity companies
    
    
    29
    
    
    
    6
    
    
    
    7
    
    
    
    1Total gross and net productive wells
    
    
    273
    
    
    
    86
    
    
    
    295
    
    
    
    176
 Gross and Net Developed Acreage
 Year Ended March 31, 2010Gross
    
    Net(thousands of acres)Gross and net developed acreageConsolidated subsidiariesUnited States
    
    
    263
    
    
    
    139Canada
    
    
    126
    
    
    
    6United Kingdom
    
    
    191
    
    
    
    17Southeast Asia
    
    
    528
    
    
    
    229Oceania
    
    
    60
    
    
    
    15Other
    
    
    -
    
    
    
    -Total consolidated subsidiaries
    
    
    1,168
    
    
    
    406Equity companiesSoutheast Asia
    
    
    3,001
    
    
    
    580Oceania
    
    
    175
    
    
    
    32Total equity companies
    
    
    3,176
    
    
    
    612Total gross and net developed acreage
    
    
    4,344
    
    
    
    1,018
 Gross and Net Undeveloped Acreage
 Year Ended March 31, 2010Gross
    
    Net(thousands of acres)Gross and net undeveloped acreageConsolidated subsidiariesUnited States
    
    
    65
    
    
    
    53Canada
    
    
    142
    
    
    
    7United Kingdom
    
    
    206
    
    
    
    50Southeast Asia
    
    
    4,175
    
    
    
    1,365Oceania
    
    
    280
    
    
    
    70Other
    
    
    2
    
    
    
    *Total consolidated subsidiaries
    
    
    4,870
    
    
    
    1,545Equity companiesSoutheast Asia
    
    
    -
    
    
    
    -Oceania
    
    
    998
    
    
    
    180Total equity companies
    
    
    998
    
    
    
    180Total gross and net undeveloped acreage
    
    
    5,868
    
    
    
    1,725
  *
    
    Nippon  Oils total proportionate interest was less than one thousand of acres.
 50




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##### Table of Contents



Construction
  Other
  51




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##### Table of Contents



Research and Development
  Lubricants
  Specialty Chemicals
 ®
 Sulfur-Free Gasoline
  HS-FCC
  Fuel Cells
  Solar Cells
  Carbon Electrode Materials for Capacitors
  52




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##### Table of Contents



Xydar ®
 ® ® ®
 GTL
  Organizational Structure
  53




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##### Table of Contents



Property, Plant and Equipment
   Land Space(Thousands ofLocation
    
    Description
    
    Principal Function
    
    square meters)JapanMinato-ku, Tokyo
    
    Head Office
    
    Other facility
    
    
    5,385Ichikawa, Chiba
    
    Ichikawa Oil Terminal
& Others
    
    Oil terminal
    
    
    1,923

    (1)Yokohama, Kanagawa
    
    Central Technical
Research Laboratory
    
    Research facility
    
    
    73Kawasaki, Kanagawa
    
    Kawasaki Office
    
    Oil terminal
    
    
    488Tokyo and other prefectures
    
    Tokyo Branch & 12
Offices
    
    Petroleum supply
and office facility
    
    
    1,211
    (2)Muroran, Hokkaido
    
    Muroran Refinery
    
    Refining facility
    
    
    1,042Yokohama, Kanagawa
    
    Yokohama Plant
    
    Refining facility
    
    
    459Yokohama, Kanagawa
    
    Negishi Refinery
    
    Refining facility
    
    
    2,270Kurashiki, Okayama
    
    Mizushima Refinery
    
    Refining facility
    
    
    1,527Takaishi, Osaka
    
    Osaka Refinery
    
    Refining facility
    
    
    966Kuga, Yamaguchi
    
    Marifu Refinery
    
    Refining facility
    
    
    659Sendai, Miyagi
    
    Sendai Refinery
    
    Refining facility
    
    
    1,508Kawasaki, Kanagawa
    
    Kawasaki Plant
    
    Refining facility
    
    
    606Oita, Oita
    
    Oita Refinery
    
    Refining facility
    
    
    1,007Toyama, Toyama
    
    Nihonkai Oil Co., Ltd.
    
    Oil terminal
    
    
    613Kainan, Wakayama
    
    Kainan Plant
    
    Refining facility
    
    
    266Kainan, Wakayama
    
    Osaki Tank Farm
Staging Terminal
    
    Oil terminal
    
    
    419Kagoshima, Kagoshima
    
    Kiire Staging Terminal
    
    Oil terminal
    
    
    1,940Uruma, Okinawa
    
    Okinawa Office
    
    Oil terminal
    
    
    N/AThroughout Japan
    
    Service stations and
oil supply and sale
facilities of ENEOS
Frontier Co., Ltd.
and two other
companies
    
    Oil supply and sale
facilities
    
    
    318Kawasaki, Kanagawa
    
    Kawasaki natural gas
power plant
    
    Other facility
    
    
    N/AYokohama, Kanagawa
    
    Nisseki Yokohama
Building
    
    Tanker
    
    
    N/AToda, Saitama
    
    Toda Asphalt Mixture
Plant
    
    Production facility
    
    
    18Outside JapanLiberia
    
    Liberia
    
    Tanker
    
    
    N/ACanada
    
    Alberta
    
    Synthetic crude oil
production facility
    
    
    N/A
 
 (1)
    
    61 thousand square meters of Ichikawa Oil Terminal & Others were leased properties.(2)
    
    949 thousand square meters of service stations included in Tokyo Branch & 12 Offices were
leased.  54




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##### Table of Contents



BUSINESS OF NIPPON MINING
 Introduction
  History and Development
      55




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##### Table of Contents



Business Overview
    
    
    The petroleum business is divided into the following operating segments:
 
    
    Petroleum Exploration & Development consists of exploration, development and
production of oil and gas, mainly through equity method investments.
    
    Petroleum Refining & Marketing consists of petroleum refining and production of
various petroleum products at refineries, as well as the supplying of
petroleum-related products and services through Nippon Minings service station
network.
    
    Petrochemicals consists of production and marketing of petrochemicals, ranging
from basic chemical products to specialty chemical products, propylene and aromatic
products for use as raw materials in synthetic fibers and resins.
 
    
    The metals business is divided into the following operating segments:
 
    
    Copper Resource Development is primarily made up of Nippon Minings equity
method investments in copper mines in South America, and also includes mines in the
development stage.
    
    Copper Smelting & Refining engages in the smelting and refining of copper and
other nonferrous metals at refineries located in Japan. This segment also incorporates
an equity method investment in a smelter in Korea.
    
    Recycling & Environmental Services and Other consists of recycling of nonferrous
metals and environmental services, such as disposal of industrial waste, as well as
other related activities.
    
    Electronic Materials consists of sales of IT-related and other electronic
materials, such as copper foil, sputtering targets, compound semiconductor materials
and rolled copper products.
 
    
    Other operations:
 
    
    Other Operations consists of manufacturing of titanium products, engineering and
electronic cables businesses, as well as corporate divisions and the subsidiaries
bearing support functions.
 56




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Fiscal Year Ended March 31,2010
    
    2009Percentage of
    
    
    
    
    
    Percentage ofRevenues
    
    Total Revenues
    
    Revenues
    
    Total Revenues(Millions of yen except percentages)Petroleum
    
    ¥
    2,417,724
    
    
    
    74.0
    
    
    ¥
    3,116,129
    
    
    
    75.9Metals
    
    
    780,705
    
    
    
    23.9
    
    
    
    902,127
    
    
    
    22.0Other Operations
    
    
    70,342
    
    
    
    2.1
    
    
    
    84,710
    
    
    
    2.1Subtotal
    
    
    3,268,771
    
    
    
    100.0
    
    
    
    4,102,966
    
    
    
    100.0Eliminations
    
    
    (35,033
    )
    
    
    
    
    
    
    (37,907
    )Total
    
    ¥
    3,233,738
    
    
    
    
    
    
    ¥
    4,065,059
 57




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##### Table of Contents



Fiscal Year Ended March 31,2010
    
    2009Percentage of
    
    
    
    
    
    Percentage ofRevenues
    
    Total Revenues
    
    Revenues
    
    Total Revenues(Millions of yen except percentages)Japan
    
    ¥
    2,175,857
    
    
    
    79.2
    
    
    ¥
    2,816,712
    
    
    
    80.6Overseas
    
    
    569,843
    
    
    
    20.8
    
    
    
    678,141
    
    
    
    19.4Total
    
    ¥
    2,745,700
    
    
    
    100.0
    
    
    ¥
    3,494,853
    
    
    
    100.0
 Petroleum
 Overview
     Petroleum Exploration & Development
   58




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##### Table of Contents



Petroleum Refining & Marketing
 Petroleum Refining
  
    
    gasoline for use in automobiles;
    
    naphtha for use in production of petrochemicals;
    
    jet fuel for use in aircraft;
    
    kerosene for use in heating homes;
    
    gas oil for use in automobiles, trains and other machinery;
    
    fuel oil A, fuel oil C and other heavy oils for use in heating buildings as well as
operation of boats and heavy machinery;
    
    LPG for use in heating, air conditioning and industrial applications;
    
    lubricant oil for use in machinery and engines; and
    
    petrochemicals for use in manufacturing of synthetic fibers, plastics and paints.
   59




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##### Table of Contents



Fiscal Year Ended March 31,2010
    
    2009Capacity
    
    Utilization Rate
    
    Capacity
    
    Utilization Rate(Thousand barrels
    
    
    
    
    
    (Thousand barrelsper day)
    
    (Percent)
    
    per day)
    
    (Percent)Mizushima
    
    
    228
    
    
    
    77
    %
    
    
    205
    
    
    
    91
    %Kashima(1)
    
    
    272
    
    
    
    74
    %
    
    
    270
    
    
    
    77
    %Total
    
    
    499
    
    
    
    75
    %
    
    
    475
    
    
    
    83
    %
 
 (1)
    
    The capacity of the Kashima Oil Refinery was increased to 273,500 barrels per day in November
2009.    Petroleum Marketing
   60




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##### Table of Contents



Petrochemicals
    61




---



##### Table of Contents



®
   Metals
 Overview
    Copper Resource Development
   62




---



##### Table of Contents



63




---



##### Table of Contents



Copper Smelting & Refining
         64




---



##### Table of Contents



Recycling & Environmental Services and Other
    Electronic Materials
        65




---



##### Table of Contents



Other Operations
 Overview
  
    
    Toho Titanium, an integrated titanium manufacturer with an extensive product lineup that
includes titanium metals, catalysts and electronic materials;
    
    Tatsuta Electric Wire & Cable Co., Ltd., an integrated electric wire manufacturer also
active in the optical and electronic components markets; and
    
    Maruwn Corporation, a comprehensive logistics company.
  Research and Development
  Fuel Cell Systems
  Petrochemicals
  66




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##### Table of Contents



Mining Technologies
  Electronic
Materials
  Recycling Metal Resources
  Organizational Structure
  Property, Plant and Equipment
   Land Space(Thousands ofsquareLocation
    
    Description
    
    Principal Activities
    
    meters)Kurashiki, Okayama
    
    Mizushima Oil Refinery
    
    Petroleum refining
    
    
    1,807Chita, Aichi
    
    Chita Oil Refinery
    
    Producing petrochemicals
    
    
    1,310Amagasaki, Hyogo
    
    Amagasaki Oil Storage (and 19 other storage facilities)
    
    Oil storage
    
    
    395Chiyoda-ku, Tokyo
    
    Tokyo Branch (and eight other branches)
    
    Service stations
    
    
    568Kamisu, Ibaraki
    
    Kashima Oil Refinery
    
    Petroleum refining
    
    
    2,790Kamisu, Ibaraki
    
    Kashima Factory
    
    Producing petrochemicals
    
    
    Hitachi, Ibaraki
    
    Hitachi office, HMC Works, Shirogane Works
    
    Metal recycling business, and electronic material processing, etc.
    
    
    4,977Kita-ibaraki, Ibaraki
    
    Isohara Works
    
    Producing sputtering targets and compound semiconductor materials
    
    
    286
 67




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##### Table of Contents



Land Space(Thousands ofsquareLocation
    
    Description
    
    Principal Activities
    
    meters)Samukawa, Kanagawa
    
    Kurami Works
    
    Producing rolled materials
    
    
    215Oita, Oita
    
    Saganoseki Smelter & Refinery
    
    Smelting and refining copper
    
    
    2,074Hitachi, Ibaraki
    
    Hitachi Works
    
    Smelting and refining copper
    
    
    34Tamano, Okayama
    
    Tamano Smelter & Refinery
    
    Smelting and refining copper
    
    
    190
  Oil Producing Activities
 Reserves
 Summary of Oil Reserves at Year Ended March 31, 2010
   Oil(millions of barrels)Proved reservesDeveloped
    
    
    19Undeveloped
    
    
    3Total proved reserves of equity method investments
    
    
    22
  Qualifications of Reserves Technical Oversight Group and Internal Controls over Proved Reserves
 Internal Controls for Reserves Estimations
  68




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Use of Third Party Estimates
  Qualified Technical Person Primarily Responsible for Overseeing Reserves Estimates
  Proved Undeveloped Reserves
  Oil Production, Production Prices and Production Costs
 Oil Production
  Fiscal Year Ended March 31,(thousands of barrels daily)2010
    
    2009
    
    2008Crude oil production of equity
method investments
    
    
    12
    
    
    
    12
    
    
    
    12
 Production Prices and Production Costs
  Fiscal Year Ended March 31,(Yen)2010
    
    2009
    
    2008Average production prices, per barrel
    
    
    5,161
    
    
    
    8,381
    
    
    
    7,478Average production costs, per barrel
    
    
    2,093
    
    
    
    1,890
    
    
    
    1,988
 Drilling and Other Exploratory and Development Activities
 Number of Net Productive and Dry Wells Drilled
  Fiscal Year Ended March 31,2010
    
    2009
    
    2008Net productive exploratory wells drilled
    
    
    -
    
    
    
    -
    
    
    
    -Net dry exploratory wells drilled
    
    
    -
    
    
    
    -
    
    
    
    -Net productive development wells drilled
    
    
    2
    
    
    
    1
    
    
    
    2Net dry development wells drilled
    
    
    -
    
    
    
    -
    
    
    
    -Total number of net wells drilled by equity method investments
    
    
    2
    
    
    
    1
    
    
    
    2
 69




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##### Table of Contents



Present Activities
 Wells Drilling
  Fiscal Year Ended March 31, 2010Gross
    
    NetGross and net wells drilling of equity method investments
    
    
    -
    
    
    
    -
 Review of Principal Ongoing Activities
  Oil  Properties, Wells, Operations and Acreage
 Gross and Net Productive Wells
  Fiscal Year Ended March 31, 2010Gross
    
    NetGross and net productive wells of equity
method investments
    
    
    91
    
    
    
    32
 Gross and Net Developed Acreage and Gross and Net Undeveloped Acreage
  Fiscal Year Ended March 31, 2010(thousands of acres)Gross
    
    NetGross and net developed acreage of equity
method investments
    
    
    233
    
    
    
    76Gross and net undeveloped acreage of
equity method investments
    
    
    523
    
    
    
    165
 Mining
Properties and Interests
 Minera Los Pelambres
 Operation Overview
   70




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Name, Location, Type of Mine and Access
    
 Ownership, Operation and Title or Lease
  71




---



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History
   Facilities and Power Source
   Development Projects
  Ore Reserves
   72




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##### Table of Contents



Minera Los Pelambres Mineral Reserves
 As of March 31, 2010Tonnage
    
    Copper
    
    Molybdenum(Millions oftonnes)Mineral Reserves (cut off grade 0.35%)Los Pelambres (100% basis):Proven
    
    
    608
    
    
    
    0.66
    %
    
    
    0.022
    %Probable
    
    
    881
    
    
    
    0.63
    %
    
    
    0.016
    %Total
    
    
    1,489
    
    
    
    0.64
    %
    
    
    0.018
    % 
 Notes:(1)
    
    Three-year trailing average prices for Cu and Mo: Cu
    
    Mo(Per lb)2009...................................................................................................................................................
    
    $
    2.91
    
    
    $
    23.4
 
 Test for impairment based on $1.70/lb Cu and $8.00/lb Mo.(2)
    
    Approximate drill hole spacings to classify the reserves are: Proven
    
    ProbableSecondary sulfides
    
    
    30m × 30m
    
    
    
    70m × 70mCentral primary sulfides
    
    
    130m × 130m
    
    
    
    250m × 250m
 
 (3)
    
    Metallurgical recoveries for the operation are approximately 90% for copper and 78% for
molybdenum.(4)
    
    March 2010 reserves are reported on the basis of a reserve estimate completed in 2009, depleted
by subsequent production.
 73




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##### Table of Contents



Caserones Copper and Molybdenum Deposits
 Overview
   Name, Location and Access
   74




---



##### Table of Contents



Ownership and Title
   History
  75




---



##### Table of Contents



Facilities and Power Source
  Development Projects
  Ore Reserves
       76




---



##### Table of Contents



Caserones Mineral Reserves
 As of March 31, 2010Tonnage
    
    Copper
    
    Molybdenum(Millions oftonnes)Mineral Reserves (cut off grade 0.1%)Caserones (100% basis):Proven
    
    
    404.2
    
    
    
    0.39
    %
    
    
    0.013
    %Probable
    
    
    755.5
    
    
    
    0.32
    %
    
    
    0.011
    %Total
    
    
    1,159.7
    
    
    
    0.34
    %
    
    
    0.012
    % 
 Notes:(1)
    
    Three-year trailing average prices for Cu and Mo: Cu
    
    Mo(Per lb)2009...................................................................................................................................................
    
    $
    2.91
    
    
    $
    23.49
 
 Test for impairment based on $2.20/lb Cu and $15.00/lb Mo.(2)
    
    Approximate drill hole spacings to classify the reserves are: Proven
    
    ProbableOxides
    
    
    50m × 50m
    
    
    
    100m × 100mSecondary sulfides
    
    
    100m × 90m
    
    
    
    150m × 135mPrimary sulfides
    
    
    100m × 150m
    
    
    
    150m × 225m
 
 (3)
    
    March 2010 reserves are reported on the basis of a reserve estimate completed on March 31, 2010.
 Quechua Copper Deposit
 Overview
  Name, Location and Access
    77




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Ownership and Title/Lease
    78




---



##### Table of Contents



History
   Facilities and Power Source
  Development Projects
  Collahuasi Mine
     Escondida Mine
    79




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##### Table of Contents



Item 4A.
    
    Unresolved Staff Comments
  
 Item 5.
    
    Operating and Financial Review and Prospects
  Overview
     Outlook
  80




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##### Table of Contents



81




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF NIPPON OIL
 Nippon Oil Overview
  
    
    Refining and marketing. The refining and marketing segment is primarily
operated through Nippon Oil and Nippon Petroleum Refining Co., Ltd. The refining and
marketing segment mainly consists of two lines of businesses: the refined petroleum
products business and the petrochemicals business. The refining and marketing segment
generates the largest portion of Nippon Oils revenues.
    
    Oil and natural gas E&P. The oil and natural gas E&P segment is operated
through Nippon Oil Exploration Limited. Nippon Oil primarily engages in the
exploration and production of oil and natural gas, focusing on five principal
geographic areas: the United States, the United Kingdom, Southeast Asia, Oceania and
Canada.
    
    Construction. The construction segment is operated through NIPPO Corporation.
Nippon Oil engages in road paving, civil engineering, design and construction of
petroleum facilities and development and construction of residential and office
buildings.
    
    Other. The other segment is operated through subsidiaries that engage in retail
sales of automotive products such as batteries and fuel additives, sales and leasing of
real estate owned by Nippon Oil, marketing, development and operation of information
technology systems and administrative and accounting services provided to Nippon Oil.
 Factors Affecting Nippon Oils Financial Results
    82




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##### Table of Contents



Refining and Marketing Segment
 Revenues
 Sales Prices.
  Sales
Volumes.
   83




---



##### Table of Contents



Costs and Expenses
 Cost of Crude Oil.
  Exchange Rate Fluctuations.
   Refining Costs.
 84




---



##### Table of Contents



Margins
   Oil and Natural Gas E&P Segment
 Revenues
 Sales Prices.
 Sales Volumes.
 85




---



##### Table of Contents



Costs and Expenses
  Construction Segment
 Revenues
  Costs and Expenses
 Costs of Raw Materials.
 Selling, General and Administrative Expenses
  Critical Accounting Policies and Estimates
   Oil and Natural Gas Reserves
  86




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##### Table of Contents



Oil and Natural Gas Properties
    Impairment of Long-Lived Assets
   87




---



##### Table of Contents



Impairment on Investments
    Asset Retirement Obligations
   88




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##### Table of Contents



Deferred Income Taxes
   March 312010
    
    2009(Millions of yen)Gross deferred tax assets
    
    ¥
    459,152
    
    
    ¥
    471,060Valuation allowance
    
    
    (151,201
    )
    
    
    (149,219
    )Total deferred tax assets
    
    ¥
    307,951
    
    
    ¥
    321,841
  Fair Value Hierarchy
  89




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##### Table of Contents



Pension Benefit Costs
      Net PeriodicChange in Assumption
    
    Pension Costs
    

    PBO(Billions of yen)Discount rates50 basis point decrease
    
    ¥
    1.7
    
    
    ¥
    11.550 basis point increase
    
    
    (0.7
    )
    
    
    (10.9
    )Expected long-term rate of return on plan assets50 basis point decrease
    
    
    0.9
    
    
    
    50 basis point increase
    
    
    (0.9
    )
    
    
    
 Recent Accounting Pronouncements
  90




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##### Table of Contents



Results of Operations
  Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Millions of yen)Revenues
    
    ¥
    4,981,281
    
    
    ¥
    6,368,424
    
    
    ¥
    6,548,809Cost of sales
    
    
    (4,588,857
    )
    
    
    (6,437,691
    )
    
    
    (6,031,480
    )Selling, general and administrative expenses
    
    
    (271,203
    )
    
    
    (274,522
    )
    
    
    (272,825
    )Operating income (loss)
    
    
    126,017
    
    
    
    (447,815
    )
    
    
    232,492Income (loss) before income taxes and equity
in earnings of affiliates
    
    
    115,871
    
    
    
    (456,131
    )
    
    
    218,253(Provision) benefit for income taxes
    
    
    (44,758
    )
    
    
    148,167
    
    
    
    (94,527
    )Net income (loss) attributable to Nippon Oil
Corporation
    
    
    64,949
    
    
    
    (295,990
    )
    
    
    128,025
 Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
 Revenues
  Cost of Sales
    91




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##### Table of Contents



Gross Margins
  Selling, General and Administrative Expenses
  Operating Income (Loss)
  Income (Loss) Before Income Taxes and Equity in Earnings of Affiliates
  (Provision) Benefit for Income Taxes
  Net Income (Loss) Attributable to Nippon Oil Corporation
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
 Revenues
  Cost of Sales
  92




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##### Table of Contents



Gross Margins
  Selling, General and Administrative Expenses
  Operating Income (Loss)
  Income (Loss) Before Income Taxes and Equity in Earnings of Affiliates
  (Provision) Benefit for Income Taxes
  93




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##### Table of Contents



Net Income (Loss) Attributable to Nippon Oil Corporation
  Geographic Information
  As of and for the Fiscal Year Ended March 31, 2010
    
    Japan
    
    Overseas
    
    Consolidated Total(Millions of yen)Revenues
    
    
    ¥4,356,108
    
    
    
    ¥625,173
    
    
    
    ¥4,981,281Property, plant, equipment and oil and natural
gas properties, net
    
    
    1,327,486
    
    
    
    223,615
    
    
    
    1,551,101
 As of and for the Fiscal Year Ended March 31, 2009
    
    Japan
    
    Overseas
    
    Consolidated Total(Millions of yen)Revenues
    
    
    ¥5,529,867
    
    
    
    ¥838,557
    
    
    
    ¥6,368,424Property, plant, equipment and oil and natural
gas properties, net
    
    
    1,343,682
    
    
    
    204,452
    
    
    
    1,548,134
 As of and for the Fiscal Year Ended March 31, 2008
    
    Japan
    
    Overseas
    

    Consolidated Total(Millions of yen)Revenues
    
    
    ¥5,814,583
    
    
    
    ¥734,226
    
    
    
    ¥6,548,809Property, plant, equipment and oil and natural
gas properties, net
    
    
    1,287,189
    
    
    
    339,468
    
    
    
    1,626,657
 Segment Information
   94




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##### Table of Contents



Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
  Fiscal YearEnded
    
    Refining
    
    Oil andNatural

    
    
    
    
    
    
    
    
    
    
    
    
    
    SegmentsMarch 31,2010
    
    andMarketing
    
    GasE&P
    
    Construction
    
    Other
    
    Eliminations
    
    Total AfterEliminations
    
    GAAPAdjustments
    
    ConsolidatedTotal(Millions of yen)Revenues
from third
parties
    
    ¥
    5,192,419
    
    
    ¥
    143,432
    
    
    ¥
    377,436
    
    
    ¥
    60,992
    
    
    
    
    
    
    ¥
    5,774,279
    
    
    ¥
    (792,998
    )
    
    ¥
    4,981,281Ordinary income
    
    
    45,545
    
    
    
    43,246
    
    
    
    19,275
    
    
    
    5,819
    
    
    
    (582
    )
    
    
    113,303
    
    
    
    N/A
    
    
    
    N/A
 Fiscal YearEnded
    
    Refining
    
    Oil andNatural

    
    
    
    
    
    
    
    
    

    
    
    
    
    SegmentsMarch 31,2009
    
    andMarketing
    
    GasE&P
    
    Construction
    
    Other
    
    Eliminations
    
    Total AfterEliminations
    
    GAAPAdjustments
    
    ConsolidatedTotal(Millions of yen)Revenues from
third parties
    
    ¥
    6,760,526
    
    
    ¥
    218,623
    
    
    ¥
    356,540
    
    
    ¥
    53,545
    
    
    
    
    
    
    ¥
    7,389,234
    
    
    ¥
    (1,020,810
    )
    
    ¥
    6,368,424Ordinary income
(loss)
    
    
    (411,301
    )
    
    
    121,078
    
    
    
    8,599
    
    
    
    6,249
    
    
    
    (74
    )
    
    
    (275,449
    )
    
    
    N/A
    
    
    
    N/A
 Refining and Marketing
    95




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##### Table of Contents



Oil and Natural Gas E&P
   Construction
   Other
   Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
  Fiscal YearEnded
    
    Refining
    
    Oil and

    
    
    
    
    
    
    
    
    

    
    
    
    
    SegmentsMarch 31,2009
    
    andMarketing
    
    NaturalGas E&P
    
    Construction
    
    Other
    
    Eliminations
    
    Total AfterEliminations
    
    GAAPAdjustments
    
    ConsolidatedTotal(Millions of yen)Revenues from third
parties
    
    ¥
    6,760,526
    
    
    ¥
    218,623
    
    
    ¥
    356,540
    
    
    ¥
    53,545
    
    
    
    
    
    
    ¥
    7,389,234
    
    
    ¥
    (1,020,810
    )
    
    ¥
    6,368,424Ordinary (loss)
income
    
    
    (411,301
    )
    
    
    121,078
    
    
    
    8,599
    
    
    
    6,249
    
    
    
    (74
    )
    
    
    (275,449
    )
    
    
    N/A
    
    
    
    N/A
 96




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##### Table of Contents



Fiscal YearEnded
    
    Refining
    
    Oil and

    
    
    
    
    
    
    
    
    

    
    
    
    
    SegmentsMarch 31,2008
    
    andMarketing
    
    NaturalGas E&P
    
    Construction
    
    Other
    
    Eliminations
    
    Total AfterEliminations
    
    GAAPAdjustments
    
    ConsolidatedTotal(Millions of yen)Revenues from third
parties
    
    ¥
    6,862,068
    
    
    ¥
    234,889
    
    
    ¥
    370,975
    
    
    ¥
    56,058
    
    
    
    
    
    
    ¥
    7,523,990
    
    
    ¥
    (975,181
    )
    
    ¥
    6,548,809Ordinary
income
    
    
    153,950
    
    
    
    111,300
    
    
    
    7,163
    
    
    
    5,207
    
    
    
    (1,953
    )
    
    
    275,667
    
    
    
    N/A
    
    
    
    N/A
 Refining and Marketing
     Oil and Natural Gas E&P
  97




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##### Table of Contents



Construction
   Other
   Financial Condition
 March 31, 2010 Compared to March 31, 2009
    98




---



##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Millions of yen)Cash and cash equivalents at beginning of year
    
    ¥
    217,091
    
    
    ¥
    203,535
    
    
    ¥
    303,227Net cash provided by operating activities
    
    
    35,376
    
    
    
    461,694
    
    
    
    111,684Net cash used in investing activities
    
    
    (145,608
    )
    
    
    (325,138
    )
    
    
    (272,349
    )Net cash provided by (used in) financing activities
    
    
    66,096
    
    
    
    (86,059
    )
    
    
    65,848Effect of exchange rate changes on cash and cash
equivalents
    
    
    8,782
    
    
    
    (36,941
    )
    
    
    (4,875
    )Net (decrease) increase in cash and cash equivalents
    
    
    (35,354
    )
    
    
    13,556
    
    
    
    (99,692
    )Cash and cash equivalents at end of year
    
    
    181,737
    
    
    
    217,091
    
    
    
    203,535
 Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
      99




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Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
       100




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##### Table of Contents



Dividends and Other Distributions to Shareholders and Repurchase of Common Stock
   Financing Activities
     Long-Term Debt
 March 31,2010

    
    2009(Millions of yen)Loans from banks, life insurance companies and government
agencies, due through March 2021 at interest rates ranging from
0.44% to 4.51%Secured
    
    ¥
    18,104
    
    
    ¥
    18,615Unsecured
    
    
    615,262
    
    
    
    635,556Unsecured bonds denominated in yen, due through June 2018, at
interest rates ranging from 0.90% to 2.48%
    
    
    180,240
    
    
    
    220,000Unsecured
Eurobonds denominated in yen, due through April 2013, at interest rates ranging from 1.16% to 1.62%
    
    
    4,982
    
    
    
    5,021
 101




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##### Table of Contents



March 31,2010

    
    2009(Millions of yen)Financing obligation associated with sale and leaseback (Note 6)Secured
    
    
    38,673
    
    
    
    40,174Capital lease obligationsDue March 2010 to March 2017 with a weighted-average interest
rate of 2.3%
    
    
    15,306
    
    
    
    14,152872,567
    
    
    
    933,518Less current portion
    
    
    (94,603
    )
    
    
    (90,167
    )¥
    777,964
    
    
    ¥
    843,351
   Short-Term Borrowings and Commercial Paper
   Contractual Obligations and Commitments
  Contractual Obligations
    
    Total

    
    Less Than1 Year

    
    1-3 Years

    
    3-5 Years
    
    More Than5 Years(Millions of yen)Long-term debt obligations
    
    ¥
    857,261
    
    
    ¥
    91,612
    
    
    ¥
    192,874
    
    
    ¥
    203,267
    
    
    ¥
    369,508Capital lease obligations(1)
    
    
    15,658
    
    
    
    2,991
    
    
    
    5,482
    
    
    
    3,840
    
    
    
    3,345Operating lease obligations(1)
    
    
    10,128
    
    
    
    1,718
    
    
    
    2,544
    
    
    
    2,272
    
    
    
    3,594Purchase obligations(2)
    
    
    36,686
    
    
    
    18,769
    
    
    
    7,744
    
    
    
    3,364
    
    
    
    6,809Total
    
    ¥
    919,733
    
    
    ¥
    115,090
    
    
    ¥
    208,644
    
    
    ¥
    212,743
    
    
    ¥
    383,256
 
 (1)
    
    Nippon Oil leases buildings, machinery, and equipment pursuant to capital lease and operating
lease transactions.(2)
    
    A purchase obligation is an enforceable and legally binding agreement to purchase goods or
services that specifies significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum, or variable price provisions; and the approximate timing of the
transactions. In the ordinary course of business, Nippon Oil has various purchase obligations,
mainly related to the acquisition of property, plant, and equipment, and maintenance
agreements for refinery equipment. The purchase obligations amounts in the table above are
based on the minimum quantities to be purchased at an agreed price or estimated prices to be
paid based on current market conditions. Accordingly, the actual amounts to be paid may vary
significantly from the amounts presented. 102




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Research and Development
   Off-Balance Sheet Arrangements
  103




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF NIPPON MINING
 Nippon Mining Overview
  Factors Affecting Nippon Minings Financial Results
  Petroleum
  Refining Margin
  Time Lag of Sales Prices Compared to Crude Oil Prices
 104




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##### Table of Contents



Revenues
  Sales Prices for Refined Petroleum Products
 Demand for Refined Petroleum and Petrochemical Products
    Product Mix and Distribution Channels
  105




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##### Table of Contents




    
    decreasing, over time, its production of fuel oil C, used for heating, machinery and
power generation, which generally has lower sales prices and correspondingly lower
refining margins;
    
    increasing its production of lighter refined petroleum products, particularly kerosene
and gas oil used for diesel fuel and heating, which generally have higher sales prices and
correspondingly higher refining margins; and
    
    increasing its production of petrochemical products, which generally have higher
refining margins and which are currently experiencing rising prices as a result of current
strong demand in Asia, particularly China.
   Cost and Expenses
  Crude Oil Prices
 Refining Costs
 Utilization Rate
 Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Barrels, except percentage data)Average refining capacity per day
    
    
    499,352
    
    
    
    437,367
    
    
    
    407,768Average refining volume per day
    
    
    374,869
    
    
    
    388,915
    
    
    
    371,513Utilization rate
    
    
    75.07
    %
    
    
    88.92
    %
    
    
    91.11
    %
 106




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##### Table of Contents



Average Cost Method Inventory
 Selling, General and Administrative Expenses
  Exchange Rate Fluctuations
   107




---



##### Table of Contents



Operating Income
  Metals
   Revenues
  Refined Copper Prices
 108




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##### Table of Contents



Average LME Price per Pound(1)Fiscal Year Ended March 31,
    
    (U.S. dollars)2006
    
    $
    1.8582007
    
    
    3.1622008
    
    
    3.4402009:April 2008
    
    
    3.939May 2008
    
    
    3.802June 2008
    
    
    3.747July 2008
    
    
    3.817August 2008
    
    
    3.463September 2008
    
    
    3.171October 2008
    
    
    2.234November 2008
    
    
    1.686December 2008
    
    
    1.393January 2009
    
    
    1.461February 2009
    
    
    1.504March 2009
    
    
    1.701Full year
    
    
    2.6602010:April 2009
    
    
    1.999May 2009
    
    
    2.072June 2009
    
    
    2.274July 2009
    
    
    2.366August 2009
    
    
    2.797September 2009
    
    
    2.811October 2009
    
    
    2.853November 2009
    
    
    3.029December 2009
    
    
    3.167January 2010
    
    
    3.350February 2010
    
    
    3.106March 2010
    
    
    3.385Full year
    
    
    2.767
 
 (1)
    
    Source: London Metal Exchange.  109




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##### Table of Contents



Demand and Sales Volume
  Cyclicality of Demand for Electronic Materials
  Technological Enhancements in Electronic Materials
 Cost and Expenses
  Copper Concentrate Costs
 110




---



##### Table of Contents



Production Costs
   Selling, General and Administrative Expenses
 Equity in Earnings of Affiliated Companies
  Other Operations
  Other Significant Factors Affecting Results of Operations
  111




---



##### Table of Contents



Interest Expenses
  Write-down of Investments in Securities
  Critical Accounting Policies and Estimates
   Impairment of Long-Lived Assets
    112




---



##### Table of Contents



Impairment on Investments
    Environmental Liability
  113




---



##### Table of Contents



Asset Retirement Obligations
      Deferred Income Taxes
   As of March 31,2010
    
    
    2009(Millions of yen)Gross deferred tax assets
    
    ¥
    207,585
    
    
    ¥
    228,153Valuation allowance
    
    
    (71,472
    )
    
    
    (88,787
    )Total deferred tax assets
    
    ¥
    136,113
    
    
    ¥
    139,366
 114




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##### Table of Contents



Pension Benefit Costs
      Net PeriodicChange in Assumption
    
    Pension Costs
    
    PBO(Billions of yen)Discount rates50 basis point decrease
    
    ¥
    (0.1
    )
    
    ¥
    4.150 basis point increase
    
    
    0.2
    
    
    
    (3.8
    )Expected long-term rate of return on plan assets50 basis point decrease
    
    
    0.1
    
    
    
    50 basis point increase
    
    
    (0.1
    )
    
    
    
 115




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##### Table of Contents



Recent Accounting Pronouncements
  Results of Operations
  Fiscal Year Ended March 31,2010
    
    2009
    
    2008(Millions of yen)Revenues
    
    ¥
    2,745,700
    
    
    ¥
    3,494,853
    
    
    ¥
    3,803,926Cost of sales
    
    
    2,494,166
    
    
    
    3,425,076
    
    
    
    3,499,505Selling, general and administrative expenses
    
    
    178,441
    
    
    
    179,244
    
    
    
    185,791Operating income (loss)
    
    
    67,541
    
    
    
    (123,891
    )
    
    
    115,813Equity in earnings of affiliated companies, net
    
    
    35,060
    
    
    
    59,356
    
    
    
    92,112Income (loss) before income taxes
    
    
    87,845
    
    
    
    (90,574
    )
    
    
    205,291Provision for income taxes
    
    
    23,369
    
    
    
    (75,961
    )
    
    
    79,094Net income attributable to noncontrolling interests
    
    
    14,904
    
    
    
    9,726
    
    
    
    25,272Net income (loss) attributable to Nippon Mining
Holdings, Inc.
    
    
    49,572
    
    
    
    (24,339
    )
    
    
    100,925
 Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
 Revenues
    
    
    the negative effect of the appreciation of the Japanese yen against the U.S. dollar,
which more than offset the favorable effect of the rise of international market prices for
copper during the fiscal year. The average LME price for the fiscal year ended March 31,
2010 was $2.77 per pound, compared to $2.66 per pound for the fiscal year ended March 31,
2009, whereas the average exchange rate of the Japanese yen against the U.S. dollar was
¥93 per dollar for the fiscal year ended March 31, 2010, compared to ¥101 per dollar for
the fiscal year ended March 31, 2009;
    
    a slight decline in sales volumes for electrolytic copper, amounting to in a 1.1%
year-on-year decrease from approximately 615,000 metric tons in the fiscal year ended
March 31, 2009 to approximately 608,000 metric tons in the fiscal year ended March 31,
2010. The decrease in sales volumes, together with the negative effect of the appreciation
of the yen, as mentioned above, resulted in a decrease in revenues of ¥58.8 billion, or
14.5% year-on-year, from electrolytic copper; and
    
    a decline in sales prices for electronic materials products, despite increased sales
volumes. Although sales volumes for a number of products reached levels above the prior
fiscal year, reflecting a recovery in the demand of end-use products, the increase in
sales volume was more than offset by the decline in sales prices due to a drop in the
price of raw materials, such as indium, and changes in the product mix, reflecting a shift
in demand from higher priced products to lower priced products. As a result, revenues from
electronic materials products decreased ¥29.4 billion, or 19.2% year-on-year.
 116




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##### Table of Contents



Cost of Sales
       Selling,
General and Administrative Expenses
  Operating Income (Loss)
  Equity in Earnings of Affiliated Companies, Net
  117




---



##### Table of Contents




    
    the earnings of Minera Los Pelambres, as well as Nippon Minings affiliates engaged in
oil and gas upstream operations, are denominated in U.S. dollars and remained relatively
stable for the years ended December 31, 2009 and 2008. However, the appreciation of the
yen against the U.S. dollar had a negative impact in Nippon Minings consolidated results.
The average exchange rate of the yen against the dollar was ¥94 per dollar for the
fiscal year ended December 31, 2009 and ¥104 per dollar for the fiscal year ended
December 31, 2008;
    
    a decrease in earnings of LS-Nikko Copper, a Korean affiliate engaged in copper
smelting and refining operations. LS-Nikko Coppers earnings decreased primarily due to a
decrease in sales volumes of by-products such as sulfuric acid. To a lesser extent, LS
Nikko Coppers earnings decreased due to the strength of the yen against the Korean won.
LS-Nikko Coppers net income for the fiscal years ended December 31, 2009 and
2008 was ¥11.9 billion and ¥19.7 billion, respectively; and
    
    Toho Titaniums earnings decreased mainly due to customer-imposed delays in the
delivery of products used in the aircraft manufacturing industry and a decline in product
demand from general industrial sectors as a result of the global economic downturn.
 Income (Loss) Before Income Taxes
  Provision for Income Taxes
  Net Income (Loss) Attributable to Nippon Mining Holdings, Inc.
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
 Revenues
    
    
    decreased demand for copper wire and other fabricated copper products resulting in a
7.2% year-on-year decline in sales volumes of electrolytic copper from approximately
663,000 metric tons in the fiscal year ended March 31, 2008 to approximately 615,000
metric tons in the fiscal year ended March 31, 2009, which resulted in a 29.5%
year-on-year decrease in revenues of ¥169.4 billion;
    
    lower copper sales prices due to a decline in average international market prices and
the strength of the Japanese yen against the U.S. dollar. The average LME price for the
fiscal year ended March 31, 2009 was
 118




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##### Table of Contents



$2.66 per pound, compared to $3.44 per pound for the
fiscal year ended March 31, 2008, whereas the average exchange rate of the Japanese yen
against the U.S. dollar was ¥101 for the fiscal year ended March 31, 2009, compared to
¥114 for the fiscal year ended March 31, 2008; and
    
    a general decrease in sales volumes for Nippon Minings electronic materials caused by
the global economic slowdown in international markets in the second half of the fiscal
year ended March 31, 2009, which resulted in a 17.9% year-on-year decrease in revenues of
¥33.3 billion.
 Cost of Sales
       Selling, General and Administrative Expenses
  Operating
Income (Loss)
  119




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##### Table of Contents



Equity in Earnings of Affiliated Companies, Net
  Income
(Loss) Before Income Taxes
  Provision for Income Taxes
  
    
    (25.1) percentage points was caused by a change in Japans tax law in 2009 that
resulted in certain deferred tax liabilities previously provided on undistributed earnings
of foreign subsidiaries and affiliates being reversed as of March 31, 2009;
    
    a non-recurring tax benefit resulting from net losses in a foreign subsidiary that
became deductible in 2009 attributed to (13.5) percentage points of the change; and
    
    an increase in the valuation allowance of 13 percentage points partially offset the
changes explained above.
 Net
Income (Loss) Attributable to Nippon Mining Holdings, Inc.
  Geographic Information
 Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
  As of and for Fiscal Year Ended March 31, 2010
    
    Japan
    
    Overseas
    
    ConsolidatedTotal(Millions of yen)Revenues
    
    ¥
    2,175,857
    
    
    ¥
    569,843
    
    
    ¥
    2,745,700Long-lived assets
    
    
    631,835
    
    
    
    65,303
    
    
    
    697,138
 120




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##### Table of Contents



As of and for Fiscal Year Ended March 31, 2009
    
    Japan
    
    Overseas
    

ConsolidatedTotal(Millions of yen)Revenues
    
    ¥
    2,816,712
    
    
    ¥
    678,141
    
    
    ¥
    3,494,853Long-lived assets
    
    
    645,145
    
    
    
    69,634
    
    
    
    714,779
 Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
  As of and for Fiscal Year Ended March 31, 2009
    
    Japan
    
    Overseas
    

ConsolidatedTotal(Millions of yen)Revenues
    
    ¥
    2,816,712
    
    
    ¥
    678,141
    
    
    ¥
    3,494,853Long-lived assets
    
    
    645,145
    
    
    
    69,634
    
    
    
    714,779
 As of and for Fiscal Year Ended March 31, 2008
    
    Japan
    
    Overseas
    

ConsolidatedTotal(Millions of yen)Revenues
    
    ¥
    3,143,317
    
    
    ¥
    660,609
    
    
    ¥
    3,803,926Long-lived assets
    
    
    649,787
    
    
    
    79,223
    
    
    
    729,010
 Segment Information
   
    
    The petroleum business is divided into the following operating segments:
 
    
    Petroleum Exploration & Development consists of exploration, development and
production of oil and gas, mainly through equity method investments.
    
    Petroleum Refining & Marketing consists of petroleum refining and production of
various petroleum products at refineries, as well as the supplying of
petroleum-related products and services through Nippon Minings service station
network.
    
    Petrochemicals consists of production and marketing of petrochemicals, ranging
from basic chemical products to specialty chemical products, propylene and aromatic
products for use as raw materials in synthetic fibers and resins.
 
    
    The metals business is divided into the following operating segments:
 
    
    Copper Resource Development is primarily made up of Nippon Minings equity
method investments in copper mines in South America, and also includes mines in the
development stage.
 121




---



##### Table of Contents




    
    Copper Smelting & Refining engages in the smelting and refining of copper and
other nonferrous metals at refineries located in Japan. This segment also incorporates
an equity method investment in a smelter in South Korea.
    
    Recycling & Environmental Services and Other consists of recycling of nonferrous
metals and environmental services, such as disposal of industrial waste, as well as
other related activities.
    
    Electronic Materials engages in production and marketing of IT-related and other electronic
materials, such as copper foils, sputtering targets, precision rolled products and precision fabricated products.
 
    
    Other operations:
 
    
    Other Operations consists of manufacturing of titanium products, engineering and
electronic cables businesses, as well as corporate divisions and subsidiaries bearing
support functions.
  Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
  Petroleum
    
    PetroleumExploration &
    
    Refining &
    
    
    
    
    
    Total PetroleumDevelopment
    
    Marketing
    
    Petrochemicals
    
    Business(Millions of yen)Fiscal Year Ended March 31, 2010Income before special items
    
    ¥
    5,770
    
    
    ¥
    20,008
    
    
    ¥
    437
    
    
    ¥
    26,215Equity in earnings of affiliated companies, net
    
    
    4,491
    
    
    
    
    
    
    
    
    
    
    
    4,491Fiscal Year Ended March 31, 2009Income (loss) before special items
    
    ¥
    9,307
    
    
    ¥
    (102,033
    )
    
    ¥
    (12,424
    )
    
    ¥
    (105,150
    )Equity in earnings of affiliated companies, net
    
    
    4,697
    
    
    
    
    
    
    
    
    
    
    
    4,697
 Recycling &Copper
    
    Copper
    
    EnvironmentalResource
    
    Smelting &
    
    Services and
    
    Electronic
    
    Total MetalsDevelopment
    
    Refining
    
    Other
    
    Materials
    
    Business(Millions of yen)Fiscal Year Ended March 31, 2010Income before special items
    
    ¥
    27,445
    
    
    ¥
    5,049
    
    
    ¥
    5,963
    
    
    ¥
    8,990
    
    
    ¥
    47,447Equity in
earnings of
 affiliated companies, net
    
    
    28,761
    
    
    
    4,514
    
    
    
    17
    
    
    
    5
    
    
    
    33,297Fiscal Year Ended March 31, 2009Income (loss) before special items
    
    ¥
    26,458
    
    
    ¥
    14,234
    
    
    ¥
    4,889
    
    
    ¥
    (17,069
    )
    
    ¥
    28,512Equity in earnings (losses) of affiliated
companies, net
    
    
    33,707
    
    
    
    10,014
    
    
    
    (28
    )
    
    
    (13
    )
    
    
    43,680
 122




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##### Table of Contents



Other
    
    
    
    
    
    Segment
    
    GAAP
    
    ConsolidatedPetroleum
    
    Metals
    
    Operations
    
    Eliminations
    
    Total
    
    Adjustments
    
    Total(Millions of yen)Fiscal Year Ended March 31, 2010Revenues
    
    ¥
    2,417,724
    
    
    ¥
    780,705
    
    
    ¥
    70,342
    
    
    ¥
    (35,033
    )
    
    ¥
    3,233,738
    
    
    ¥
    (488,038
    )
    
    ¥
    2,745,700Income before special items
    
    
    26,215
    
    
    
    47,447
    
    
    
    2,409
    
    
    
    (2,104
    )
    
    
    73,967
    
    
    
    N/A
    
    
    
    N/ADepreciation and amortization
    
    
    47,425
    
    
    
    25,682
    
    
    
    5,819
    
    
    
    112
    
    
    
    79,038
    
    
    
    (16,475
    )
    
    
    62,563Equity in earnings of affiliated
companies, net
    
    
    4,491
    
    
    
    33,297
    
    
    
    433
    
    
    
    
    
    
    
    38,221
    
    
    
    (3,161
    )
    
    
    35,060Capital expenditures
    
    
    27,064
    
    
    
    31,736
    
    
    
    23,462
    
    
    
    110
    
    
    
    82,372
    
    
    
    (22,906
    )
    
    
    59,466Total assets
    
    
    1,208,977
    
    
    
    683,998
    
    
    
    727,536
    
    
    
    (533,004
    )
    
    
    2,067,507
    
    
    
    (53,360
    )
    
    
    2,014,147Fiscal Year Ended March 31, 2009Revenues
    
    ¥
    3,116,129
    
    
    ¥
    902,127
    
    
    ¥
    84,710
    
    
    ¥
    (37,907
    )
    
    ¥
    4,065,059
    
    
    ¥
    (570,206
    )
    
    ¥
    3,494,853Income (loss) before special items
    
    
    (105,150
    )
    
    
    28,512
    
    
    
    9,666
    
    
    
    (461
    )
    
    
    (67,433
    )
    
    
    N/A
    
    
    
    N/ADepreciation and amortization
    
    
    45,271
    
    
    
    29,570
    
    
    
    5,718
    
    
    
    31
    
    
    
    80,590
    
    
    
    (19,917
    )
    
    
    60,673Equity in earnings of affiliated
companies, net
    
    
    4,697
    
    
    
    43,680
    
    
    
    520
    
    
    
    
    
    
    
    48,897
    
    
    
    10,459
    
    
    
    59,356Capital expenditures
    
    
    32,035
    
    
    
    42,303
    
    
    
    22,990
    
    
    
    143
    
    
    
    97,471
    
    
    
    (22,536
    )
    
    
    74,935Total assets
    
    
    1,091,869
    
    
    
    600,939
    
    
    
    681,884
    
    
    
    (488,609
    )
    
    
    1,886,083
    
    
    
    (40,971
    )
    
    
    1,845,112
 Petroleum
  Petroleum exploration & development.
 Petroleum refining & marketing.
 123




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##### Table of Contents



Petrochemicals.
 Metals
  Copper resource development.
 Copper smelting & refining.
  Recycling & environmental services and other.
 Electronic materials.
 124




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##### Table of Contents



Other Operations
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
  Petroleum
    
    PetroleumExploration &
    
    Refining &
    
    
    
    
    
    Total PetroleumDevelopment
    
    Marketing
    
    Petrochemicals
    
    Business(Millions of yen)Fiscal Year Ended March 31, 2009Income (loss) before special items
    
    ¥
    9,307
    
    
    ¥
    (102,033
    )
    
    ¥
    (12,424
    )
    
    ¥
    (105,150
    )Equity in earnings of affiliated companies, net
    
    
    4,697
    
    
    
    
    
    
    
    
    
    
    
    4,697Fiscal Year Ended March 31, 2008Income (loss) before special items
    
    ¥
    12,885
    
    
    ¥
    55,270
    
    
    ¥
    (308
    )
    
    ¥
    67,847Equity in
earnings (losses) of affiliated
companies, net
    
    
    7,654
    
    
    
    (524
    )
    
    
    
    
    
    
    7,130
 Recycling &Copper
    
    Copper
    
    EnvironmentalResource
    
    Smelting &
    
    Services and
    
    Electronic
    
    Total MetalsDevelopment
    
    Refining
    
    Other
    
    Materials
    
    Business(Millions of yen)Fiscal Year Ended March 31, 2009Income (loss) before special items
    
    ¥
    26,458
    
    
    ¥
    14,234
    
    
    ¥
    4,889
    
    
    ¥
    (17,069
    )
    
    ¥
    28,512Equity in
earnings (losses) of affiliated
companies, net
    
    
    33,707
    
    
    
    10,014
    
    
    
    (28
    )
    
    
    (13
    )
    
    
    43,680Fiscal Year Ended March 31, 2008Income (loss) before special items
    
    ¥
    57,275
    
    
    ¥
    42,869
    
    
    ¥
    14,309
    
    
    ¥
    (1,058
    )
    
    ¥
    113,395Equity in earnings of affiliated
companies, net
    
    
    66,123
    
    
    
    14,765
    
    
    
    16
    
    
    
    19
    
    
    
    80,923
 Other
    
    
    
    
    
    Segment
    
    GAAP
    
    ConsolidatedPetroleum
    
    Metals
    
    Operations
    
    Eliminations
    
    Total
    
    Adjustments
    
    Total(Millions of yen)Fiscal Year Ended March 31, 2009Revenues
    
    ¥
    3,116,129
    
    
    ¥
    902,127
    
    
    ¥
    84,710
    
    
    ¥
    (37,907
    )
    
    ¥
    4,065,059
    
    
    ¥
    (570,206
    )
    
    ¥
    3,494,853Income (loss) before special items
    
    
    (105,150
    )
    
    
    28,512
    
    
    
    9,666
    
    
    
    (461
    )
    
    
    (67,433
    )
    
    
    N/A
    
    
    
    N/ADepreciation and amortization
    
    
    45,271
    
    
    
    29,570
    
    
    
    5,718
    
    
    
    31
    
    
    
    80,590
    
    
    
    (19,917
    )
    
    
    60,673Equity in earnings of affiliated
companies, net
    
    
    4,697
    
    
    
    43,680
    
    
    
    520
    
    
    
    
    
    
    
    48,897
    
    
    
    10,459
    
    
    
    59,356Capital expenditures
    
    
    32,035
    
    
    
    42,303
    
    
    
    22,990
    
    
    
    143
    
    
    
    97,471
    
    
    
    (22,536
    )
    
    
    74,935Total assets
    
    
    1,091,869
    
    
    
    600,939
    
    
    
    681,884
    
    
    
    (488,609
    )
    
    
    1,886,083
    
    
    
    (40,971
    )
    
    
    1,845,112
 125




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##### Table of Contents



Other
    
    
    
    
    
    Segment
    
    GAAP
    
    ConsolidatedPetroleum
    
    Metals
    
    Operations
    
    Eliminations
    
    Total
    
    Adjustments
    
    Total(Millions of yen)Fiscal Year Ended March 31, 2008Revenues
    
    ¥
    3,193,934
    
    
    ¥
    1,119,645
    
    
    ¥
    76,538
    
    
    ¥
    (50,645
    )
    
    ¥
    4,339,472
    
    
    ¥
    (535,546
    )
    
    ¥
    3,803,926Income before special items
    
    
    67,847
    
    
    
    113,395
    
    
    
    11,254
    
    
    
    (470
    )
    
    
    192,026
    
    
    
    N/A
    
    
    
    N/ADepreciation and amortization
    
    
    35,725
    
    
    
    26,506
    
    
    
    519
    
    
    
    113
    
    
    
    62,863
    
    
    
    (10,132
    )
    
    
    52,731Equity in earnings of affiliated
companies, net
    
    
    7,130
    
    
    
    80,923
    
    
    
    3,874
    
    
    
    
    
    
    
    91,927
    
    
    
    185
    
    
    
    92,112Capital expenditures
    
    
    68,773
    
    
    
    30,943
    
    
    
    645
    
    
    
    487
    
    
    
    100,848
    
    
    
    4,811
    
    
    
    105,659Total assets
    
    
    1,409,106
    
    
    
    769,690
    
    
    
    677,197
    
    
    
    (604,785
    )
    
    
    2,251,208
    
    
    
    (17,009
    )
    
    
    2,234,199
 Petroleum
  Petroleum exploration & development
 Petroleum refining & marketing
 Petrochemicals
 Metals
   126




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##### Table of Contents



Copper resource development
 Copper smelting & refining
 Recycling & environmental services and other
 Electronic materials
 Other Operations
  Financial Condition
 March 31, 2010 Compared to March 31, 2009
   127




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##### Table of Contents



March 31, 2009 Compared to March 31, 2008
     Cash Flows
 Fiscal Year Ended March 31,2010
    
    
    2009
    
    
    2008(Millions of yen)Cash and cash equivalents at beginning of year
    
    ¥
    113,947
    
    
    ¥
    65,151
    
    
    ¥
    46,729Net cash provided by operating activities
    
    
    3,630
    
    
    
    281,000
    
    
    
    65,107Net cash used in investing activities
    
    
    (62,943
    )
    
    
    (75,600
    )
    
    
    (114,391
    )Net cash
provided by (used in) financing activities
    
    
    32,237
    
    
    
    (152,646
    )
    
    
    67,274Effect of exchange rate changes on cash and cash equivalents
    
    
    299
    
    
    
    (3,958
    )
    
    
    432Net (decrease) increase  in cash and cash equivalents
    
    
    (26,777
    )
    
    
    48,796
    
    
    
    18,422Cash and cash equivalents at end of year
    
    
    87,170
    
    
    
    113,947
    
    
    
    65,151
 Fiscal Year Ended March 31, 2010 compared to Fiscal Year Ended March 31, 2009
  128




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##### Table of Contents




    
    replacement of refinery and smelting facilities;
    
    replacement and renovation of service station facilities in the petroleum business; and
    
    new investments in the recycling & environmental services and other segment in the
metals business.
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
    129




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##### Table of Contents



Dividends
    Liquidity and Capital Resources
    Liquidity
    130




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##### Table of Contents



Borrowings
   Long-term Debt
   March 31,2010
    

    2009(Millions of yen)Unsecured bonds, due through June
2018 at interest rates ranging from
1.37% to 2.32%
    
    ¥
    35,000
    
    
    ¥
    35,000Loans from banks, life insurance
companies and government agencies,
due through March 2019 at interest
rates ranging from 0.53% to 5.67%Secured
    
    
    29,994
    
    
    
    45,627Unsecured
    
    
    307,153
    
    
    
    270,139Financing obligation associated with
the sale and leaseback of the
headquarters property secured
    
    
    47,114
    
    
    
    48,995Capital lease obligations
    
    
    18,725
    
    
    
    20,876437,986
    
    
    
    420,637Less current portion
    
    
    (81,860
    )
    
    
    (45,612
    )Total
    
    ¥
    356,126
    
    
    ¥
    375,025
 131




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##### Table of Contents



Short-Term Borrowings
  Debt Servicing
  Working Capital
  Payment of Dividends
  Research and Development
   Impact of Foreign Currency Fluctuations
   132




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##### Table of Contents



March 31,2010

    
    2009
    
        2008(Billions of yen)Notional amounts of derivative financial instruments outstanding:Foreign exchange
    
    ¥
    192.0
    
    
    ¥
    145.9
    
    
    ¥
    234.3Commodity
    
    
    109.3
    
    
    
    165.7
    
    
    
    194.0Interest rate
    
    
    141.5
    
    
    
    141.2
    
    
    
    147.1Total
    
    ¥
    442.8
    
    
    ¥
    452.8
    
    
    ¥
    575.4
 Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodContractual Obligation
    
    Total
    

    Less than 1Year
    

    1-3 Years
    

    3-5 Years
    

    More than 5Years(Millions of yen)Long-term debt obligations
    
    ¥
    419,262
    
    
    ¥
    77,712
    
    
    ¥
    140,861
    
    
    ¥
    125,731
    
    
    ¥
    74,958Capital lease obligations(1)
    
    
    19,085
    
    
    
    4,148
    
    
    
    5,644
    
    
    
    3,213
    
    
    
    6,080Operating lease obligations(1)
    
    
    26,130
    
    
    
    3,004
    
    
    
    5,111
    
    
    
    4,041
    
    
    
    13,974Purchase obligations(2)(3)
    
    
    1,734,765
    
    
    
    865,493
    
    
    
    508,875
    
    
    
    264,508
    
    
    
    95,889Total
    
    ¥
    2,199,242
    
    
    ¥
    950,357
    
    
    ¥
    660,491
    
    
    ¥
    397,493
    
    
    ¥
    190,901
 
 (1)
    
    Nippon Mining leases buildings, machinery, equipment and software licenses pursuant to
capital lease and operating lease transactions.(2)
    
    A purchase obligation is an enforceable and legally binding agreement to purchase goods or
services that specifies significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum, or variable price provisions; and the approximate timing of the
transactions. Nippon Mining has various obligations to purchase in the ordinary course of
business, mainly related to the acquisition of copper concentrate, crude oil and refined
products. Other not significant purchase obligations relate to transportation and distribution
services; properties, plants and equipment; and utilities such as electricity and industrial
water. Most of Nippon Minings purchase obligations are based on market prices or formulas
based on market prices and generally include fixed or minimum volume requirements. The
purchase obligation amounts in the table above are based on the minimum quantities to be
purchased at estimated prices to be paid based on current market conditions. Accordingly, the
actual amounts to be paid may vary significantly from the amounts presented.(3)
    
    Purchase obligations of ¥66,244 million within one year and ¥66,243 million within one to
three years pertain to obligations to purchase copper from Nippon Minings equity method
affiliate, Minera Los Pelambres. 133




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##### Table of Contents



TREND INFORMATION RELATING TO THE OIL INDUSTRY
 Crude Oil and Gasoline
     
 Source: Bloomberg 134




---



##### Table of Contents



Average retailprice of regular
    
    Average pricegasoline in Japan
    
    of crude oilper liter(1)
    
    per kiloliter(2)Fiscal Year Ended/Ending March 31,
    
    (Japanese yen)2009:April 2008
    
    ¥
    131
    
    
    ¥
    64,007May 2008
    
    
    160
    
    
    
    70,631June 2008
    
    
    173
    
    
    
    80,627July 2008
    
    
    182
    
    
    
    88,547August 2008
    
    
    185
    
    
    
    91,973September 2008
    
    
    174
    
    
    
    82,205October 2008
    
    
    163
    
    
    
    67,013November 2008
    
    
    136
    
    
    
    45,392December 2008
    
    
    118
    
    
    
    32,432January 2009
    
    
    106
    
    
    
    24,622February 2009
    
    
    109
    
    
    
    25,638March 2009
    
    
    112
    
    
    
    26,8982010:April 2009
    
    
    114
    
    
    
    29,473May 2009
    
    
    117
    
    
    
    32,153June 2009
    
    
    121
    
    
    
    35,906July 2009
    
    
    125
    
    
    
    41,814August 2009
    
    
    126
    
    
    
    40,616September 2009
    
    
    129
    
    
    
    42,726October 2009
    
    
    129
    
    
    
    39,723November 2009
    
    
    127
    
    
    
    42,608December 2009
    
    
    127
    
    
    
    44,151January 2010
    
    
    126
    
    
    
    44,756February 2010
    
    
    129
    
    
    
    44,736March 2010
    
    
    130
    
    
    
    43,3162011:April 2010
    
    
    133
    
    
    
    46,449May 2010
    
    
    139
    
    
    
    49,714
 
 (1)
    
    Source for gasoline prices: The Oil Information Center. Prices shown include gasoline tax.(2)
    
    Source for crude oil prices: Trade Statistics of Japan. Outlook
  135




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##### Table of Contents



Item 6.
    
    Directors, Senior Management and Employees
 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
   Number of SharesOwned as of July 7,
    
    PercentageName
    
    Position
    
    Date of Birth
    
    2010
    
    OwnershipShinji Nishio
    
    Representative Director and
Chairman of the Board
    
    October 23, 1940
    
    
    112,350
    
    
    *Mitsunori Takahagi
    
    Representative Director and
President
    
    December 3, 1940
    
    
    153,770
    
    
    *Shigeo Hirai
    
    Director, Executive Vice President
    
    May 30, 1948
    
    
    65,270
    
    
    *Kiyonobu Sugiuchi
    
    Director, Senior Vice President
    
    May 16, 1949
    
    
    62,270
    
    
    *Yukio Yamagata
    
    Director, Senior Vice President
    
    September 20, 1949
    
    
    25,171
    
    
    *Kazuo Kagami
    
    Director, Senior Vice President
    
    December 4, 1951
    
    
    38,705
    
    
    *Ichiro Uchijima
    
    Director, Senior Vice President
    
    February 9, 1952
    
    
    24,000
    
    
    *Junichi Kawada
    
    Director, Senior Vice President
    
    September 26, 1955
    
    
    14,980
    
    
    *Yasushi Kimura
    
    Director (Part-time) and
President of JX Nippon Oil &
Energy Corporation
    
    February 28, 1948
    
    
    46,010
    
    
    *Isao Matsushita
    
    Director (Part-time) and
Executive Vice President of JX
Nippon Oil & Energy
Corporation
    
    April 3, 1947
    
    
    89,500
    
    
    *Makoto Koseki
    
    Director (Part-time) and
President of JX Nippon Oil &
Gas Exploration Corporation
    
    July 23, 1946
    
    
    36,380
    
    
    *Masanori Okada
    
    Director (Part-time) and
President of JX Nippon Mining
& Metals Corporation
    
    September 27, 1946
    
    
    80,000
    
    
    *Etsuhiko Shoyama
    
    Outside Director
    
    March 9, 1936
    
    
    10,500
    
    
    *Juichi Takamura
    
    Outside Director
    
    January 24, 1938
    
    
    12,500
    
    
    *Masahiro Sakata
    
    Outside Director
    
    September 20, 1943
    
    
    2,140
    
    
    *Hiroshi Komiyama
    
    Outside Director
    
    December 15, 1944
    
    
    10,700
    
    
    *Fumio Ito
    
    Standing Corporate Auditor
    
    January 5, 1949
    
    
    57,270
    
    
    *Hideo Tabuchi
    
    Standing Corporate Auditor
    
    April 16, 1950
    
    
    26,750
    
    
    *
 
 *
    
    Shares held represent less than 1% of the total number of outstanding shares of common stock
of JX Holdings. Shinji Nishio
 Mitsunori Takahagi
 136




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##### Table of Contents



Shigeo Hirai
 Kiyonobu Sugiuchi
 Yukio Yamagata
 Kazuo Kagami
 Ichiro Uchijima
 Junichi Kawada
 Yasushi Kimura
 Isao Matsushita
 Makoto Koseki
 Masanori Okada
 137




---



##### Table of Contents



Etsuhiko Shoyama
 Juichi Takamura
 Masahiro Sakata
 Hiroshi Komiyama
 Fumio Ito
 Hideo Tabuchi
  Director Compensation
   Employees
     138




---



##### Table of Contents



Item 7.
    
    Major Shareholders and Related Party Transactions
 MAJOR SHAREHOLDERS
  Number of Shares
    
    Percentage of Total SharesName
    
    (Thousands of shares)
    
    OutstandingJapan Trustee Services Bank, Ltd. (Trust Unit)
    
    
    168,687
    
    
    
    6.81
    %The Master Trust Bank of Japan, Ltd. (Trust Unit)
    
    
    158,661
    
    
    
    6.40
    %
   RELATED PARTY TRANSACTIONS
     139




---



##### Table of Contents



Item 8.
    
    Financial Information
 Financial Statements
  Export Sales
  Legal Proceedings
    Dividend Policy
   Significant Changes
  140




---



##### Table of Contents



Item 9.
    
    The Offer and Listing
 Comparative Per Share Market Price Data
   Price per Share
    
    Average DailyHigh
    
    Low
    
    Trading VolumeFiscal Year Ending March 31, 2011:First quarter
    
    ¥
    559
    
    
    ¥
    431
    
    
    
    14,027,059April 2010
    
    
    559
    
    
    
    439
    
    
    
    20,087,786May 2010
    
    
    544
    
    
    
    461
    
    
    
    12,696,600June 2010
    
    
    515
    
    
    
    431
    
    
    
    9,517,659Second quarterJuly 2010 (through July 7)
    
    
    460
    
    
    
    422
    
    
    
    8,705,620
 Nippon Oils Common Stock
    
    
    Nippon Minings Common StockAverage daily
    
    
    
    
    
    
    
    
    
    
    Average dailytrading
    
    
    
    
    
    
    
    
    
    
    tradingPrice per share
    
    
    volume
    
    
    Price per share
    
    
    volumeHigh
    
    
    Low
    
    
    
    
    
    
    High
    
    
    LowFiscal Year Ended March 31,2006
    
    
    1,082
    
    
    
    687
    
    
    
    6,340,785
    
    
    
    1,024
    
    
    
    565
    
    
    
    4,926,8112007
    
    
    984
    
    
    
    749
    
    
    
    6,940,256
    
    
    
    1,162
    
    
    
    753
    
    
    
    7,002,4152008
    
    
    1,202
    
    
    
    610
    
    
    
    7,840,833
    
    
    
    1,286
    
    
    
    498
    
    
    
    6,402,4332009
    
    
    841
    
    
    
    308
    
    
    
    7,864,094
    
    
    
    731
    
    
    
    211
    
    
    
    6,928,412First quarter
    
    
    841
    
    
    
    616
    
    
    
    7,463,484
    
    
    
    731
    
    
    
    526
    
    
    
    6,189,379Second quarter
    
    
    742
    
    
    
    506
    
    
    
    6,851,984
    
    
    
    699
    
    
    
    414
    
    
    
    6,068,627Third quarter
    
    
    556
    
    
    
    308
    
    
    
    9,157,033
    
    
    
    429
    
    
    
    211
    
    
    
    8,283,557Fourth quarter
    
    
    543
    
    
    
    357
    
    
    
    8,171,949
    
    
    
    452
    
    
    
    295
    
    
    
    7,399,0932010
    
    
    618
    
    
    
    355
    
    
    
    7,425,715
    
    
    
    589
    
    
    
    324
    
    
    
    6,154,761First quarter
    
    
    618
    
    
    
    473
    
    
    
    6,996,197
    
    
    
    589
    
    
    
    394
    
    
    
    7,512,898Second quarter
    
    
    570
    
    
    
    476
    
    
    
    5,531,597
    
    
    
    508
    
    
    
    407
    
    
    
    4,904,790Third quarter
    
    
    508
    
    
    
    355
    
    
    
    8,582,459
    
    
    
    451
    
    
    
    324
    
    
    
    5,519,533Fourth quarter
    
    
    539
    
    
    
    413
    
    
    
    8,685,621
    
    
    
    461
    
    
    
    380
    
    
    
    6,020,570January 2010
    
    
    468
    
    
    
    415
    
    
    
    8,796,000
    
    
    
    433
    
    
    
    385
    
    
    
    5,954,947February 2010
    
    
    485
    
    
    
    413
    
    
    
    9,775,947
    
    
    
    450
    
    
    
    380
    
    
    
    5,958,711March 2010
    
    
    539
    
    
    
    460
    
    
    
    7,544,950
    
    
    
    461
    
    
    
    427
    
    
    
    6,148,053
 141




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##### Table of Contents



Item 10.
    
    Additional Information
 MEMORANDUM AND ARTICLES OF INCORPORATION
                       142




---



##### Table of Contents



kabushiki kaisha
 General
    soukabunushi
tsuchi
  143




---



##### Table of Contents



Dividends
 General
   
    
    following approval at JX Holdings general meeting of shareholders, distribute annual
dividends in cash and/or in kind to shareholders of record as of March 31 of each year;
    
    by resolution of JX Holdings board of directors, distribute interim dividends in cash
to shareholders of record as of September 30 of each year; and
    
    following approval at JX Holdings general meeting of shareholders, distribute
dividends in cash and/or in kind to shareholders of a record date to be fixed for such
distribution from time to time.
  Restrictions on Dividends
   the sum of:
 (a)
    
    the amount of surplus, as described below; and(b)
    
    in the event that provisional financial statements are prepared and approved, the
aggregate amount of (i) the net income for the relevant period as provided for by an
ordinance of the Ministry of Justice , and (ii) the amount of consideration that JX
Holdings received for the treasury stock that JX Holdings disposed of during such period;
 over the sum of:
 (c)
    
    the book value of treasury stock;(d)
    
    in the event that JX Holdings disposed of treasury stock after the end of the last
fiscal year, the amount of consideration that JX Holdings received for such treasury
stock;(e)
    
    in the event described in (b) in this paragraph, the amount of net loss for such
period described in the statement of income constituting the provisional financial
statements; and
 144




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##### Table of Contents



(f)
    
    certain other amounts set forth in ordinances of the Ministry of Justice, including
(if the sum of one-half of JX Holdings goodwill and deferred assets exceeds the total of
its stated capital, capital surplus reserve and earned surplus reserve, each such amount
as it appears on the balance sheet as of the end of the last fiscal year) all or a certain
part of such excess amount as calculated in accordance with the ordinances of the Ministry
of Justice.
  the sum of:
 (i)
    
    the aggregate of other capital surplus and other retained earnings at the end of the
last fiscal year;(ii)
    
    in the event that JX Holdings disposed of treasury stock after the end of the last
fiscal year, the difference between the book value of such treasury stock and the
consideration that JX Holdings received for such treasury stock;(iii)
    
    in the event that JX Holdings reduced JX Holdings stated capital after the end of
the last fiscal year, the amount of such reduction less the portion thereof that has been
transferred to capital surplus reserve and/or earned surplus reserve (if any); and(iv)
    
    in the event that capital surplus reserve and/or earned surplus reserve were reduced
after the end of the last fiscal year, the amount of such reduction less the portion
thereof that has been transferred to stated capital (if any);
 over the sum of:
 (v)
    
    in the event that JX Holdings canceled treasury stock after the end of the last
fiscal year, the book value of such treasury stock;(vi)
    
    in the event that JX Holdings distributed surplus after the end of the last fiscal
year, the aggregate of the following amounts:
 a.
    
    the aggregate amount of the book value of the distributed assets, excluding
the book value of such assets that would be distributed to shareholders but for their
exercise of the right to receive dividends in cash instead of dividends in kind;b.
    
    the aggregate amount of cash distributed to shareholders who exercised the
right to receive a distribution in cash instead of a distribution in kind; andc.
    
    the aggregate amount of cash paid to shareholders holding fewer shares than
the shares that were required in order to receive a distribution in kind; and
 (vii)
    
    the aggregate amounts of a. through d. below, less e. and f. below:
 a.
    
    in the event that the amount of surplus was reduced and transferred to
capital surplus reserve, earned surplus reserve and/or stated capital after the end
of the last fiscal year, the amount so transferred;b.
    
    in the event that JX Holdings paid dividends after the end of the last
fiscal year, the amount set aside in JX Holdings capital surplus reserve and/or
earned surplus reserve;c.
    
    in the event that JX Holdings disposed of treasury stock in the process of
(x) a merger in which JX Holdings acquired all rights and obligations of a company,
(y) a corporate split in which JX Holdings acquired all or a part of the rights and
obligations of a split company or (z) a share exchange in which JX Holdings acquired
all shares of a company after the end of the last fiscal year, the difference between
the book value of such treasury stock and the consideration that JX Holdings received
for such treasury stock;
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d.
    
    in the event that the amount of surplus was reduced in the process of a
corporate split in which JX Holdings transferred all or a part of JX Holdings rights
and obligations after the end of the last fiscal year, the amount so reduced;e.
    
    in the event of (x) a merger in which JX Holdings acquired all rights and
obligations of a company, (y) a corporate split in which JX Holdings acquired all or
a part of the rights and obligations of a split company or (z) a share exchange in
which JX Holdings acquired all shares of a company after the end of the last fiscal
year, the aggregate amount of (i) the amount of JX Holdings other capital surplus
after such merger, corporate split or share exchange, less the amount of its other
capital surplus before such merger, corporate split or share exchange, and (ii) the
amount of its other retained earnings after such merger, corporate split or share
exchange, less the amount of its other retained earnings before such merger,
corporate split or share exchange; andf.
    
    in the event that an obligation to cover a deficiency, such as the
obligation of a person who subscribed to newly issued shares with an unfair amount to
be paid in, was fulfilled after the end of the last fiscal year, the amount of other
capital surplus increased by such payment.
 Capital and Reserves
  Share Splits
   Reverse Share Split
   146




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Unit Share System
   General Meetings of Shareholders
    Voting Rights
    147




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##### Table of Contents



(a)
    
    any amendment to JX Holdings articles of incorporation (except for amendments that
may be authorized solely by the board of directors under the Companies Act);(b)
    
    a reduction of stated capital, subject to certain exceptions, such as a reduction of
stated capital for the purpose of replenishing capital deficiencies;(c)
    
    a dissolution, merger or consolidation, subject to certain exceptions under which a
shareholders resolution is not required;(d)
    
    the transfer of all or a substantial part of JX Holdings business, subject to
certain exceptions under which a shareholders resolution is not required;(e)
    
    the taking over of the whole of the business of any other corporation, subject to
certain exceptions under which a shareholders resolution is not required;(f)
    
    a corporate split, subject to certain exceptions under which a shareholders
resolution is not required;(g)
    
    a share exchange or share transfer for the purpose of establishing a 100 percent
parent-subsidiary relationships, subject to a certain exceptions under which a
shareholders resolution is not required;(h)
    
    any issuance of new shares or transfer of existing shares held by JX Holdings as
treasury stock at a specially favorable price and any issuance of stock acquisition rights
or bonds with stock acquisition rights at a specially favorable price or on specially
favorable conditions to any persons other than shareholders;(i)
    
    any acquisition by JX Holdings of its own shares from specific persons other than JX
Holdings subsidiaries;(j)
    
    a reverse share split; or(k)
    
    the removal of a corporate auditor.
 Liquidation Rights
  Subscription Rights
  Stock Acquisition Rights
  148




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Register of Shareholders
 kobetsukabunushi
tsuchi
 Record Date
   Repurchase by JX Holdings of Common Stock
  (a)
    
    by way of purchase on any stock exchange on which its shares are listed or by way of
a tender offer under the Financial Instruments and Exchange Act of Japan (the FIEA);(b)
    
    by soliciting all shareholders to offer to sell the shares held by them pursuant to a
resolution of the general meeting of shareholders;(c)
    
    by purchase from a specific party other than any of its subsidiaries, pursuant to a
special resolution of a general meeting of shareholders; and(d)
    
    by purchase from any of its subsidiaries, pursuant to the resolution of the board of
directors.
   149




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Transfer Agent
  Reporting of Shareholders
  MATERIAL CONTRACTS
  FOREIGN EXCHANGE AND OTHER REGULATIONS
 Japanese Foreign Exchange Controls
   
    
    individuals who are resident in Japan; or
    
    corporations whose principal offices are located inside Japan.
  
    
    individuals who are not resident in Japan; or
    
    corporations whose principal offices are located outside Japan. Generally, branches and
other offices of non-resident corporations within Japan are regarded as residents of
Japan, and branches and other offices of Japanese corporations located outside Japan are
regarded as non-residents of Japan.
  
    
    individuals who are not resident in Japan;
    
    corporations organized under the laws of foreign countries or whose principal offices
are located outside Japan; or
    
    corporations (i) not less than 50% of the voting rights of which are held, directly or
indirectly, by individuals and/or corporations falling within the definition of foreign
investors above or (ii) a majority
 150




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of the directors or other officers (or directors or
other officers having the power of representation) of which are individuals who are not
resident in Japan.
 Acquisition of Shares
  
    
    the aggregate purchase price of the relevant shares is ¥100 million or less;
    
    the transfer is made through any securities firm, bank or other entity prescribed by
the Exchange Regulations acting as an agent or intermediary; or
    
    the acquisition constitutes an Inward Direct Investment described below.
 Inward Direct Investment
   Dividends and Proceeds of Sales
  TAXATION
 You are urged to consult your own tax advisor regarding the United States federal, state and
local and the Japanese and other tax consequences of owning and disposing of JX Holdings shares in
your particular circumstances.
 Japanese Tax Consequences
  151




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Ownership and Disposition of JX Holdings Shares
     152




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U.S. Federal Income Tax Consequences
  
    
    certain financial institutions;
    
    dealers or traders in securities who use a mark-to-market method of tax accounting;
    
    persons holding JX Holdings shares as part of a hedging transaction, straddle, wash
sale, conversion transaction or integrated transaction or persons entering into a
constructive sale with respect to the JX Holdings shares;
    
    persons whose functional currency for U.S. federal income tax purposes is not the
U.S. dollar;
    
    entities classified as partnerships for U.S. federal income tax purposes;
    
    tax-exempt entities, including an individual retirement account or Roth IRA;
    
    persons that own or are deemed to own ten percent or more of the voting stock of JX
Holdings;
    
    persons who acquired JX Holdings shares pursuant to the exercise of an employee stock
option or otherwise as compensation; or
    
    persons holding JX Holdings shares in connection with a trade or business conducted
outside of the United States.
    153




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
    
    a citizen or resident of the United States;
    
    a corporation, or other entity taxable as a corporation, created or organized in or
under the laws of the United States, any state therein or the District of Columbia; or
    
    an estate or trust the income of which is subject to U.S. federal income taxation
regardless of its source.
   Taxation of Distributions
 pro rata yen
  Sale or Other Disposition of JX Holdings shares
  Passive Foreign Investment Company Rules
  154




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U.S. Holders should consult their tax advisers regarding whether the Company is or was a PFIC
and the potential application of the PFIC rules.
 Information Reporting and Backup Withholding
    155




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DOCUMENTS ON DISPLAY
     156




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Item 11.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Nippon Oil
   Commodity Price Risk
   Foreign Currency Exchange Rate Risk
    157




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Interest Rate Risk
   Equity Securities Price Risk
  Nippon Mining
   Foreign Currency Exchange Rate Risk
    158




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March 31, 2010Average Contractual Rates
    
    Contract Amounts
    
    Estimated Fair Value(Millions of yen)$1.00 = ¥90.4
    
    ¥
    192,033
    
    
    ¥
    1,870
 Commodity Price Risk
   Interest Rate Risk
   Equity Securities Price Risk
  
 Item 12.
    
    Description of Securities Other than Equity Securities
  159




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PART II
 
 Item 13.
    
    Defaults, Dividend Arrearages and Delinquencies
  
 Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15.
    
    Controls and Procedures
  
 Item 16A.
    
    Audit Committee Financial Expert
  
 Item 16B.
    
    Code of Ethics
  
 Item 16C.
    
    Principal Accountant Fees and Services
 Fees Paid to Principal Accountant
  160




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For the fiscal year ended March 31,2010
    
    2009Nippon Oil
    
    Nippon Mining
    
    Nippon Oil
    
    Nippon Mining(Millions of yen)Audit Fees
    
    ¥
    661
    
    
    ¥
    562
    
    
    ¥
    722
    
    
    ¥
    818Audit-Related Fees
    
    
    78
    
    
    
    52
    
    
    
    135
    
    
    
    285Tax Fees
    
    
    84
    
    
    
    13
    
    
    
    73
    
    
    
    17All Other Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    ¥
    823
    
    
    ¥
    627
    
    
    ¥
    930
    
    
    ¥
    1,120
 Policies and Procedures of the Board of Corporate Auditors
     
 Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
  
 Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
 Item 16F.
    
    Change in Registrants Certifying Accountant
  
 Item 16G.
    
    Corporate Governance
  161




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PART III
 
 Item 17.
    
    Financial Statements
  
 Item 18.
    
    Financial Statements
  
 Item 19.
    
    Exhibits
  Exhibit Number
    
    DescriptionExhibit 1.1
    
    Articles of Incorporation of JX Holdings, Inc.Exhibit 1.2
    
    Regulations of the Board of Directors of JX Holdings, Inc.Exhibit 1.3
    
    Share Handling Regulations of JX Holdings, Inc.Exhibit 8.1
    
    List of subsidiaries of Nippon Oil
CorporationExhibit 8.2
    
    List of subsidiaries of Nippon
Mining Holdings, Inc.Exhibit 12.1
    
    Certifications required by Rule 13a-14(a) (17 CFR
240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d 14(a))Exhibit 13.1
    
    Certifications required by Rule 13a-14(b) (17 CFR
240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d 14(b)) and
Section 1350 of Chapter 63 of Title 18 of the United States
Code (18 U.S.C. 1350)Exhibit 15.1
    
    Report of DeGolyer and MacNaughton
for Nippon Oil CorporationExhibit 15.2
    
    Report of DeGolyer and MacNaughton
for Japan Energy Development Corporation
  162




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SIGNATURES
  JX HOLDINGS, INC.By:

/s/
Mitsunori TakahagiName:
    Mitsunori TakahagiTitle:
    PresidentAttorney-in-Fact  163




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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageAudited Consolidated Financial Statements of Nippon OilReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of March 31, 2010 and 2009
    
    F-3Consolidated Statements of Operations for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-5Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-6Consolidated
Statements of Changes in Equity for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-7Notes to Consolidated Financial Statements
    
    F-8Supplemental Information on Oil and Natural Gas Exploration and Production Activities (Unaudited)
    
    F-39Schedule II  Valuation and Qualifying Accounts
    
    F-50Audited Consolidated Financial Statements of Nippon MiningReport of Independent Registered Public Accounting Firm
    
    F-51Consolidated Balance Sheets as of March 31, 2010 and 2009
    
    F-52Consolidated Statements of Operations for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-53Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-54Consolidated
Statements of Changes in Equity for the Fiscal Years ended March 31, 2010, 2009 and 2008
    
    F-55Notes to Consolidated Financial Statements
    
    F-56Supplemental Information on Oil Producing Activities (Unaudited)
    
    F-85Schedule II  Valuation and Qualifying Accounts
    
    F-89Audited Financial Statements of Minera Los PelambresReport of Independent Registered Public Accounting Firm
    
    F-90Balance Sheets at December 31, 2009 and 2008
    
    F-91Statements of Income for the Years ended December 31, 2009, 2008 and 2007
    
    F-93Statements of Cash Flows for the Years ended December 31, 2009, 2008 and 2007
    
    F-94Notes to the Financial Statements
    
    F-95
 F-1




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F-2




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NIPPON
OIL CORPORATION
 
 CONSOLIDATED
BALANCE SHEETS
 Yen in millionsMarch 312010
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    
    181,737
    
    
    
    217,091Short-term investments
    
    
    -
    
    
    
    40,000Accounts and notes receivable, net:Trade
    
    
    765,929
    
    
    
    598,149Other
    
    
    121,517
    
    
    
    176,153Inventories
    
    
    809,327
    
    
    
    630,083Deferred income taxes
    
    
    27,766
    
    
    
    58,866Prepaid expenses
    
    
    2,638
    
    
    
    2,638Other current assets
    
    
    58,846
    
    
    
    77,391Total current assets
    
    
    1,967,760
    
    
    
    1,800,371Non-current assets:Property, plant, equipment and oil and natural gas properties, net
    
    
    1,551,101
    
    
    
    1,548,134Investment in affiliates
    
    
    139,600
    
    
    
    138,975Investment securities:Securities
available for sale  carried at fair value
    
    
    209,978
    
    
    
    189,754Securities
being held to maturity  carried at amortized cost
    
    
    5,833
    
    
    
    5,862Nonmarketable
equity securities  carried at cost
    
    
    23,421
    
    
    
    23,138Deferred income taxes
    
    
    157,739
    
    
    
    166,470Other non-current assets
    
    
    124,807
    
    
    
    114,111Total non-current assets
    
    
    2,212,479
    
    
    
    2,186,444Total assets
    
    
    4,180,239
    
    
    
    3,986,815
  F-3




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NIPPON OIL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
 Yen in millionsMarch 312010
    

    2009LIABILITIES AND EQUITYCurrent liabilities:Accounts and notes payable:Trade
    
    
    501,624
    
    
    
    366,516Other
    
    
    229,326
    
    
    
    227,551Short-term borrowings
    
    
    461,833
    
    
    
    400,298Commercial paper
    
    
    317,000
    
    
    
    242,000Current portion of long-term debt
    
    
    94,603
    
    
    
    90,167Accrued expenses
    
    
    39,845
    
    
    
    43,504Excise taxes payable
    
    
    311,571
    
    
    
    324,299Income taxes payable
    
    
    24,064
    
    
    
    29,796Customer deposits
    
    
    84,166
    
    
    
    81,944Deferred income taxes
    
    
    4,863
    
    
    
    8,906Other current liabilities
    
    
    79,995
    
    
    
    129,832Total current liabilities
    
    
    2,148,890
    
    
    
    1,944,813Non-current liabilities:Long-term debt, less current portion
    
    
    777,964
    
    
    
    843,351Pension and severance benefits
    
    
    46,499
    
    
    
    75,818Deferred income taxes
    
    
    151,375
    
    
    
    156,093Other non-current liabilities
    
    
    87,792
    
    
    
    83,001Total non-current liabilities
    
    
    1,063,630
    
    
    
    1,158,263Total liabilities
    
    
    3,212,520
    
    
    
    3,103,076Commitments and contingenciesStockholders equity:Common
stock, no par value(5,000,000 thousand shares authorized, 1,464,508 thousand shares issued)
    
    
    139,437
    
    
    
    139,437Capital surplus
    
    
    275,697
    
    
    
    275,699Retained earnings
    
    
    516,203
    
    
    
    480,454Accumulated other comprehensive loss
    
    
    (36,062
    )
    
    
    (85,238
    )Treasury
stock, at cost(15,339 thousand shares and 15,097 thousand shares at March 31, 2010 and
2009 respectively)
    
    
    (8,190
    )
    
    
    (8,073
    )Equity attributable to Nippon Oil Corporation
    
    
    887,085
    
    
    
    802,279Noncontrolling interests
    
    
    80,634
    
    
    
    81,460Total equity
    
    
    967,719
    
    
    
    883,739Total liabilities and equity
    
    
    4,180,239
    
    
    
    3,986,815
  F-4




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NIPPON
OIL CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Yen in millionsYear Ended March 312010

    
    2009
    
    2008Revenues
    
    
    4,981,281
    
    
    
    6,368,424
    
    
    
    6,548,809Cost of sales
    
    
    (4,588,857
    )
    
    
    (6,437,691
    )
    
    
    (6,031,480
    )Selling, general and administrative expenses
    
    
    (271,203
    )
    
    
    (274,522
    )
    
    
    (272,825
    )Gain on disposition of property, plant and equipment, net
    
    
    19,204
    
    
    
    5,725
    
    
    
    5,813Loss on impairment of oil and natural gas properties
    
    
    (7,921
    )
    
    
    (97,627
    )
    
    
    -Loss on impairment of property, plant and equipment
    
    
    (6,487
    )
    
    
    (12,124
    )
    
    
    (17,825
    )Operating income (loss)
    
    
    126,017
    
    
    
    (447,815
    )
    
    
    232,492Interest expense, net
    
    
    (22,175
    )
    
    
    (21,127
    )
    
    
    (23,313
    )Foreign currency exchange (losses) gains, net
    
    
    (3,809
    )
    
    
    14,103
    
    
    
    13,193Gain on sales of investment securities, net
    
    
    4,219
    
    
    
    44
    
    
    
    8,007Loss on impairment of investment securities
    
    
    (6,117
    )
    
    
    (32,443
    )
    
    
    (3,435
    )Dividend income
    
    
    10,063
    
    
    
    15,168
    
    
    
    5,558Other income (loss), net
    
    
    7,673
    
    
    
    15,939
    
    
    
    (14,249
    )Income (loss) before income taxes and equity in earnings of affiliates
    
    
    115,871
    
    
    
    (456,131
    )
    
    
    218,253(Provision)
benefit for income taxes:Current
    
    
    (32,612
    )
    
    
    (43,394
    )
    
    
    (88,915
    )Deferred
    
    
    (12,146
    )
    
    
    191,561
    
    
    
    (5,612
    )71,113
    
    
    
    (307,964
    )
    
    
    123,726Equity in (losses) earnings of affiliates
    
    
    (2,470
    )
    
    
    10,362
    
    
    
    7,674Net income (loss)
    
    
    68,643
    
    
    
    (297,602
    )
    
    
    131,400Less: Net (income) loss attributable to noncontrolling interests
    
    
    (3,694
    )
    
    
    1,612
    
    
    
    (3,375
    )Net income (loss) attributable to Nippon Oil Corporation
    
    
    64,949
    
    
    
    (295,990
    )
    
    
    128,025YenNet income (loss) per share attributable to Nippon Oil Corporation:
    
    
    44.81
    
    
    
    (204.01
    )
    
    
    88.12
  F-5




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NIPPON
OIL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Yen in millionsYear Ended March 312010
    
    2009
    
    2008Cash flows from operating activities:Net income (loss)
    
    
    68,643
    
    
    
    (297,602
    )
    
    
    131,400Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation, depletion and amortization
    
    
    149,690
    
    
    
    172,083
    
    
    
    150,483Gain on disposition of property, plant and equipment, net
    
    
    (19,204
    )
    
    
    (5,725
    )
    
    
    (5,813
    )Loss on impairment of oil and natural gas properties
    
    
    7,921
    
    
    
    97,627
    
    
    
    -Loss on impairment of property, plant and equipment
    
    
    6,487
    
    
    
    12,124
    
    
    
    17,825Gain on sales of investment securities, net
    
    
    (4,219
    )
    
    
    (44
    )
    
    
    (8,007
    )Loss on impairment of investment securities
    
    
    6,117
    
    
    
    32,443
    
    
    
    3,435Equity in losses (earnings) of affiliates, net of dividends received
    
    
    6,562
    
    
    
    (2,299
    )
    
    
    723Deferred income taxes
    
    
    12,146
    
    
    
    (191,561
    )
    
    
    5,612Changes in assets and liabilities:Accounts and
notes receivable - trade, net
    
    
    (150,148
    )
    
    
    414,964
    
    
    
    (69,234
    )Inventories
    
    
    (183,365
    )
    
    
    580,432
    
    
    
    (276,748
    )Accounts and
notes payable - trade
    
    
    133,402
    
    
    
    (323,120
    )
    
    
    152,494Pension and severance benefits
    
    
    (8,465
    )
    
    
    (10,555
    )
    
    
    (12,327
    )Income taxes payable
    
    
    16,370
    
    
    
    (52,968
    )
    
    
    17,142Other
    
    
    (6,561
    )
    
    
    35,895
    
    
    
    4,699Net cash provided by operating activities
    
    
    35,376
    
    
    
    461,694
    
    
    
    111,684Cash flows from investing activities:Acquisition of investment securities and investment in affiliates
    
    
    (16,342
    )
    
    
    (168,962
    )
    
    
    (36,210
    )Proceeds from sales of investment securities
    
    
    12,983
    
    
    
    963
    
    
    
    17,603Purchases of property, plant, equipment and oil and natural gas properties
    
    
    (191,400
    )
    
    
    (173,620
    )
    
    
    (262,650
    )Proceeds from sales of property, plant and equipment
    
    
    51,386
    
    
    
    21,012
    
    
    
    21,248Acquisition of Kyushu Oil Co., Ltd., net of cash acquired
    
    
    -
    
    
    
    (13,169
    )
    
    
    -Other
    
    
    (2,235
    )
    
    
    8,638
    
    
    
    (12,340
    )Net cash used in investing activities
    
    
    (145,608
    )
    
    
    (325,138
    )
    
    
    (272,349
    )Cash flows from financing activities:Increase (decrease) in short-term borrowings and commercial paper, net
    
    
    132,599
    
    
    
    (196,630
    )
    
    
    93,564Proceeds from issuance of long-term debt
    
    
    17,542
    
    
    
    279,887
    
    
    
    89,005Repayments of long-term debt
    
    
    (48,808
    )
    
    
    (126,032
    )
    
    
    (91,469
    )Net purchases of treasury stock
    
    
    (119
    )
    
    
    (1,878
    )
    
    
    (99
    )Cash dividends paid to common stock
    
    
    (29,200
    )
    
    
    (23,383
    )
    
    
    (17,562
    )Cash dividends paid to noncontrolling interests
    
    
    (5,918
    )
    
    
    (18,023
    )
    
    
    (7,591
    )Net cash provided by (used in) financing activities
    
    
    66,096
    
    
    
    (86,059
    )
    
    
    65,848Effect of exchange rate changes on cash and cash equivalents
    
    
    8,782
    
    
    
    (36,941
    )
    
    
    (4,875
    )Net (decrease) increase in cash and cash equivalents
    
    
    (35,354
    )
    
    
    13,556
    
    
    
    (99,692
    )Cash and cash equivalents at beginning of year
    
    
    217,091
    
    
    
    203,535
    
    
    
    303,227Cash and cash equivalents at end of year
    
    
    181,737
    
    
    
    217,091
    
    
    
    203,535Supplemental data:Cash paid during the year forInterest paid
    
    
    (25,032
    )
    
    
    (28,976
    )
    
    
    (28,968
    )Income taxes paid
    
    
    (16,348
    )
    
    
    (101,663
    )
    
    
    (76,858
    )Non-cash investing and financing activitiesCapital leases
    
    
    3,063
    
    
    
    6,595
    
    
    
    3,079
  F-6




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##### Table of Contents



NIPPON OIL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Shares of common stock
    
    Yen in millions(in thousands)
    
    Attributable to Nippon Oil CorporationAccumulated
    
    Compre-Other
    
    hensive
    
    
    
    
    
    Non-Held in
    
    Common
    
    Capital
    
    Retained
    
    Comprehensive
    
    Income
    
    Treasury
    
    controllingIssued
    
    Treasury
    
    Stock
    
    Surplus
    
    Earnings
    
    Income (Loss)
    
    (Loss)
    
    Stock
    
    Interests
    
    TotalBalance at April 1, 2007
    
    
    1,464,508
    
    
    
    11,210
    
    
    
    139,437
    
    
    
    275,761
    
    
    
    689,364
    
    
    
    105,364
    
    
    
    
    
    
    
    (6,158
    )
    
    
    108,556
    
    
    
    1,312,324Shares purchased
    
    
    
    
    
    
    1,128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,151
    )
    
    
    
    
    
    
    (1,151
    )Shares reissued
    
    
    
    
    
    
    (1,082
    )
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,030
    
    
    
    
    
    
    
    1,052Dividends on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,562
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,591
    )
    
    
    (25,153
    )Other equity transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,329
    
    
    
    4,329Comprehensive income
(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,025
    
    
    
    
    
    
    
    128,025
    
    
    
    
    
    
    
    3,375
    
    
    
    131,400Other comprehensive
income (loss), net of
taxes:Unrealized losses
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,287
    )
    
    
    (34,287
    )
    
    
    
    
    
    
    (3,234
    )
    
    
    (37,521
    )Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,065
    )
    
    
    (15,065
    )
    
    
    
    
    
    
    
    
    
    
    (15,065
    )Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,289
    )
    
    
    (1,289
    )
    
    
    
    
    
    
    (764
    )
    
    
    (2,053
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,384
    
    
    
    
    
    
    
    (623
    )
    
    
    76,761Balance at March 31, 2008
    
    
    1,464,508
    
    
    
    11,256
    
    
    
    139,437
    
    
    
    275,783
    
    
    
    799,827
    
    
    
    54,723
    
    
    
    
    
    
    
    (6,279
    )
    
    
    104,671
    
    
    
    1,368,162Shares purchased
    
    
    
    
    
    
    4,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,191
    )
    
    
    
    
    
    
    (2,191
    )Shares reissued
    
    
    
    
    
    
    (599
    )
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    313Dividends on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,383
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,023
    )
    
    
    (41,406
    )Other equity transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,892
    
    
    
    2,892Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (295,990
    )
    
    
    
    
    
    
    (295,990
    )
    
    
    
    
    
    
    (1,612
    )
    
    
    (297,602
    )Other comprehensive
loss, net of taxes:Unrealized losses
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,563
    )
    
    
    (45,563
    )
    
    
    
    
    
    
    (2,253
    )
    
    
    (47,816
    )Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,420
    )
    
    
    (14,420
    )
    
    
    
    
    
    
    
    
    
    
    (14,420
    )Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,978
    )
    
    
    (79,978
    )
    
    
    
    
    
    
    (4,215
    )
    
    
    (84,193
    )Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (435,951
    )
    
    
    
    
    
    
    (8,080
    )
    
    
    (444,031
    )Balance at March 31, 2009
    
    
    1,464,508
    
    
    
    15,097
    
    
    
    139,437
    
    
    
    275,699
    
    
    
    480,454
    
    
    
    (85,238
    )
    
    
    
    
    
    
    (8,073
    )
    
    
    81,460
    
    
    
    883,739Shares purchased
    
    
    
    
    
    
    280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )Shares reissued
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    18Dividends on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,918
    )
    
    
    (35,118
    )Other equity transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,080
    
    
    
    2,080Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,949
    
    
    
    
    
    
    
    64,949
    
    
    
    
    
    
    
    3,694
    
    
    
    68,643Other comprehensive
income, net of taxes:Unrealized gains on
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,248
    
    
    
    13,248
    
    
    
    
    
    
    
    1,145
    
    
    
    14,393Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,213
    
    
    
    14,213
    
    
    
    
    
    
    
    (1,313
    )
    
    
    12,900Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,715
    
    
    
    21,715
    
    
    
    
    
    
    
    (514
    )
    
    
    21,201Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,125
    
    
    
    
    
    
    
    3,012
    
    
    
    117,137Balance at March 31, 2010
    
    
    1,464,508
    
    
    
    15,339
    
    
    
    139,437
    
    
    
    275,697
    
    
    
    516,203
    
    
    
    (36,062
    )
    
    
    
    
    
    
    (8,190
    )
    
    
    80,634
    
    
    
    967,719
  F-7




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##### Table of Contents



NIPPON OIL CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1. Nature of Operations
   2. Summary of Significant Accounting Policies
 Financial statements presentation
   Principles of consolidation
    Use of estimates
  
    
    the assessments of oil and natural gas reserves which affect the calculation of
depreciation, depletion and amortization and the ceiling test under full cost method of
accounting for oil and natural gas reserves,
    
    the recognition and measurement of asset retirement obligations,
    
    the measurement of financial assets and liabilities at fair value,
    
    the recognition and measurement of current and deferred income tax assets and
liabilities (including the measurement of uncertain tax benefit) and
    
    the measurement of pension and severance benefits (including the determination of
various actuarial assumptions).
  F-8




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Foreign currency translation
   Cash and cash equivalents
  Allowance for doubtful accounts
   March 312010
    
    2009Accounts and notes receivable, net
    
    
    2,114
    
    
    
    3,286Other non-current assets
    
    
    5,717
    
    
    
    6,656Total
    
    
    7,831
    
    
    
    9,942
 Inventories
   Property, plant and equipment
   Buildings
    
    
    2 to 50 yearsOil tanks
    
    
    10 to 15 yearsMachinery and equipment
    
    
    7 to 15 years
  F-9




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Oil and natural gas properties
     Asset retirement obligations
    Impairment of long-lived assets
    F-10




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Investment securities
 Debt and marketable equity securities
    Non-marketable equity securities
   Derivative financial instruments and hedging activities
  Environmental liabilities
  Pension and severance benefits
  Revenue recognition
   F-11




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Shipping and handling costs
  Research and development costs
  Income taxes
    Earnings per share
  Changes in accounting principles
  
    
    An expanded definition of oil and gas producing activities to include
nontraditional resources such as bitumen extracted from oil sands.
    
    The use of an average of the first-day-of-the-month price for the 12-month
period, rather than a year-end price for determining whether reserves can be produced
economically.
    
    Amended definitions of key terms such as reliable technology and reasonable
certainty which are used in estimating proved oil and gas reserve quantities.
    
    A requirement for disclosing separate information about reserve quantities and
financial statement amounts for geographical areas representing 15 percent or more of
proved reserves.
    
    Clarification that an entitys equity investments must be considered in
determining whether it has significant oil and gas activities and a requirement to
disclose equity method investments in the same level of detail as is required for
consolidated investments.
    F-12




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     New accounting standards
   F-13




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. Inventories
  March 312010
    
    2009Merchandise and finished products
    
    
    191,850
    
    
    
    158,957Crude oil
    
    
    202,695
    
    
    
    146,197Crude oil and others in transit
    
    
    185,411
    
    
    
    101,188Work in process
    
    
    153,498
    
    
    
    148,702Raw materials and supplies
    
    
    54,458
    
    
    
    51,312Real estate for sale
    
    
    21,415
    
    
    
    23,727Total
    
    
    809,327
    
    
    
    630,083
  4. Property, Plant, Equipment and Oil and Natural Gas Properties and Asset Retirement Obligations
  March 312010
    
    2009Accumulated
    
    
    
    
    
    AccumulatedGross
    
    Depreciation,
    
    Gross
    
    Depreciation,Carrying
    
    Depletion and
    
    Carrying
    
    Depletion andAmount
    
    Amortization
    
    Amount
    
    AmortizationOil and natural gas propertiesSubject to depreciation,
depletion and amortization
    
    
    528,032
    
    
    
    388,192
    
    
    
    467,449
    
    
    
    333,154Not subject to
depreciation, depletion
and amortization
    
    
    25,061
    
    
    
    -
    
    
    
    20,940
    
    
    
    -Total oil and natural
gas properties
    
    
    553,093
    
    
    
    388,192
    
    
    
    488,389
    
    
    
    333,154Property, plant and equipmentLand
    
    
    652,266
    
    
    
    -
    
    
    
    625,957
    
    
    
    -Buildings
    
    
    872,289
    
    
    
    585,250
    
    
    
    881,049
    
    
    
    589,337Oil tanks
    
    
    278,623
    
    
    
    244,895
    
    
    
    279,311
    
    
    
    245,809Machinery and equipment
    
    
    1,857,191
    
    
    
    1,464,328
    
    
    
    1,812,472
    
    
    
    1,398,739Construction in progress
    
    
    20,304
    
    
    
    -
    
    
    
    27,995
    
    
    
    -Total property, plant and equipment
    
    
    3,680,673
    
    
    
    2,294,473
    
    
    
    3,626,784
    
    
    
    2,233,885Total
    
    
    4,233,766
    
    
    
    2,682,665
    
    
    
    4,115,173
    
    
    
    2,567,039
   Costs Incurred in the Year Ended March 312010
    
    2009
    
    2008
    
    Prior to 2008
    
    TotalExploration costs
    
    
    15,445
    
    
    
    2,699
    
    
    
    4,717
    
    
    
    2,200
    
    
    
    25,061Total oil and
natural gas
properties not
subject to
depreciation,
depletion and
amortization
    
    
    15,445
    
    
    
    2,699
    
    
    
    4,717
    
    
    
    2,200
    
    
    
    25,061
 F-14




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Asset retirement obligations
  Oil and Natural
    
    Refining andGas E&P
    
    Marketing
    
    TotalBalance at April 1, 2007
    
    
    37,745
    
    
    
    9,297
    
    
    
    47,042Liabilities incurred
    
    
    3,035
    
    
    
    4,306
    
    
    
    7,341Accretion expense
    
    
    1,804
    
    
    
    80
    
    
    
    1,884Liabilities settled
    
    
    (760
    )
    
    
    (1,000
    )
    
    
    (1,760
    )Exchange difference
    
    
    850
    
    
    
    -
    
    
    
    850Balance at March 31, 2008
    
    
    42,674
    
    
    
    12,683
    
    
    
    55,357Less current portion
    
    
    (1,271
    )
    
    
    (300
    )
    
    
    (1,571
    )Long-term portion
    
    
    41,403
    
    
    
    12,383
    
    
    
    53,786Balance at April 1, 2008
    
    
    42,674
    
    
    
    12,683
    
    
    
    55,357Liabilities incurred
    
    
    4,097
    
    
    
    1,975
    
    
    
    6,072Revisions to cash flow estimates
    
    
    739
    
    
    
    -
    
    
    
    739Accretion expense
    
    
    1,889
    
    
    
    98
    
    
    
    1,987Liabilities settled
    
    
    (1,158
    )
    
    
    (1,000
    )
    
    
    (2,158
    )Exchange difference
    
    
    (13,231
    )
    
    
    -
    
    
    
    (13,231
    )Balance at March 31, 2009
    
    
    35,010
    
    
    
    13,756
    
    
    
    48,766Less current portion
    
    
    (2,188
    )
    
    
    (200
    )
    
    
    (2,388
    )Long-term portion
    
    
    32,822
    
    
    
    13,556
    
    
    
    46,378Balance at April 1, 2009
    
    
    35,010
    
    
    
    13,756
    
    
    
    48,766Liabilities incurred
    
    
    2,994
    
    
    
    2,794
    
    
    
    5,788Revisions to cash flow estimates
    
    
    3,137
    
    
    
    -
    
    
    
    3,137Accretion expense
    
    
    2,247
    
    
    
    176
    
    
    
    2,423Liabilities settled
    
    
    (1,695
    )
    
    
    (8,696
    )
    
    
    (10,391
    )Exchange difference
    
    
    2,468
    
    
    
    -
    
    
    
    2,468Balance at March 31, 2010
    
    
    44,161
    
    
    
    8,030
    
    
    
    52,191Less current portion
    
    
    (3,039
    )
    
    
    (2,517
    )
    
    
    (5,556
    )Long-term portion
    
    
    41,122
    
    
    
    5,513
    
    
    
    46,635
     F-15




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5. Leases
 Capital leases
  March 312010
    
    2009Buildings
    
    
    7,358
    
    
    
    7,885Machinery and equipment
    
    
    19,001
    
    
    
    15,740Less accumulated amortization
    
    
    (12,621
    )
    
    
    (10,930
    )Total
    
    
    13,738
    
    
    
    12,695
  For the years ending March 31:2011
    
    
    2,9912012
    
    
    2,7832013
    
    
    2,6992014
    
    
    2,2542015
    
    
    1,5862016 and thereafter
    
    
    3,345Total minimum lease payments
    
    
    15,658Less amounts representing interest
    
    
    (352
    )Present value of net minimum lease payments included in long-term debt
    
    
    15,306Less current portion
    
    
    (2,991
    )Long-term capital lease obligations
    
    
    12,315
  Operating leases
  For the years ending March 31:2011
    
    
    1,7182012
    
    
    1,3352013
    
    
    1,2092014
    
    
    1,1702015
    
    
    1,1022016 and thereafter
    
    
    3,594Total minimum rental payments
    
    
    10,128
  F-16




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6. Sale and Leaseback Transaction
    7. Loss on Impairment of Long-lived Assets
    Year Ended March 312010
    
    2009
    
    2008Oil and natural gas propertiesProperties based on full cost method of accounting
    
    
    7,921
    
    
    
    97,627
    
    
    
    -7,921
    
    
    
    97,627
    
    
    
    -Property, plant and equipmentLand
    
    
    4,888
    
    
    
    9,974
    
    
    
    12,469Buildings
    
    
    907
    
    
    
    1,055
    
    
    
    5,241Other
    
    
    692
    
    
    
    1,095
    
    
    
    1156,487
    
    
    
    12,124
    
    
    
    17,825Total impairment loss on long-lived assets
    
    
    14,408
    
    
    
    109,751
    
    
    
    17,825
 8. Investment Securities
 Debt and marketable equity securities
   F-17




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 March 312010
    
    2009Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAggregate
    
    Unrealized
    
    Unrealized
    
    
    
    
    
    Aggregate
    
    Unrealized
    
    UnrealizedCost*
    
    Fair Value
    
    Gains
    
    Losses
    
    Cost*
    
    Fair Value
    
    Gains
    
    LossesCurrent:Held-to-maturity securities:Debt securities
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    40,000
    
    
    
    39,408
    
    
    
    -
    
    
    
    592Total short-term investments
in debt securities
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    40,000
    
    
    
    39,408
    
    
    
    -
    
    
    
    592Non-current:Available-for-sale securities:Debt securities
    
    
    581
    
    
    
    575
    
    
    
    -
    
    
    
    6
    
    
    
    550
    
    
    
    522
    
    
    
    -
    
    
    
    28Equity securities
    
    
    149,939
    
    
    
    209,403
    
    
    
    59,742
    
    
    
    278
    
    
    
    154,029
    
    
    
    189,232
    
    
    
    37,944
    
    
    
    2,741Total available-for-sale
securities
    
    
    150,520
    
    
    
    209,978
    
    
    
    59,742
    
    
    
    284
    
    
    
    154,579
    
    
    
    189,754
    
    
    
    37,944
    
    
    
    2,769Held-to-maturity securities:Debt securities
    
    
    5,833
    
    
    
    6,227
    
    
    
    394
    
    
    
    -
    
    
    
    5,862
    
    
    
    6,318
    
    
    
    456
    
    
    
    -Total held-to-maturity
securities
    
    
    5,833
    
    
    
    6,227
    
    
    
    394
    
    
    
    -
    
    
    
    5,862
    
    
    
    6,318
    
    
    
    456
    
    
    
    -Total investments in debt and
equity securities
    
    
    156,353
    
    
    
    216,205
    
    
    
    60,136
    
    
    
    284
    
    
    
    160,441
    
    
    
    196,072
    
    
    
    38,400
    
    
    
    2,769
  March 31, 2010Available-for-Sale
    
    Held-to-MaturityAggregate
    
    
    
    
    
    AggregateCost*
    
    Fair Value
    
    Cost*
    
    Fair ValueDue in one year or less
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Due after one year through five years
    
    
    81
    
    
    
    81
    
    
    
    5,833
    
    
    
    6,227Due after five years through ten years
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Due after ten years
    
    
    500
    
    
    
    494
    
    
    
    -
    
    
    
    -581
    
    
    
    575
    
    
    
    5,833
    
    
    
    6,227
    Year Ended March 312010
    
    2009
    
    2008Proceeds from sales of
available-for-sale securities
    
    
    10,267
    
    
    
    760
    
    
    
    9,604Gross realized gains
    
    
    4,169
    
    
    
    34
    
    
    
    7,739Gross realized losses
    
    
    913
    
    
    
    12
    
    
    
    12
  F-18




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 31, 2010Less Than 12 Months
    
    12 Months or Longer
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossAggregate
    
    Unrealized
    
    Aggregate
    
    Unrealized
    
    Aggregate
    
    UnrealizedFair Value
    
    Losses
    
    Fair value
    
    Losses
    
    Fair Value
    
    LossesDebt securities
    
    
    575
    
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    575
    
    
    
    6Equity securities
    
    
    7,760
    
    
    
    278
    
    
    
    -
    
    
    
    -
    
    
    
    7,760
    
    
    
    278Total
    
    
    8,335
    
    
    
    284
    
    
    
    -
    
    
    
    -
    
    
    
    8,335
    
    
    
    284
 March 31, 2009Less Than 12 Months
    
    12 Months or Longer
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossAggregate
    
    Unrealized
    
    Aggregate
    
    Unrealized
    
    Aggregate
    
    UnrealizedFair Value
    
    Fair Value
    
    Fair Value
    
    Fair Value
    
    Fair Value
    
    Fair ValueDebt securities
    
    
    522
    
    
    
    28
    
    
    
    -
    
    
    
    -
    
    
    
    522
    
    
    
    28Equity securities
    
    
    25,967
    
    
    
    2,741
    
    
    
    -
    
    
    
    -
    
    
    
    25,967
    
    
    
    2,741Total
    
    
    26,489
    
    
    
    2,769
    
    
    
    -
    
    
    
    -
    
    
    
    26,489
    
    
    
    2,769
  Non-marketable equity securities
   9. Business Combination
 For the year ended March 31, 2009
 Acquisition of Kyushu Oil Co., Ltd .
     F-19




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Variable Interest Entities
    March 312010
    
    2009On-Balance
    
    On-BalanceSheet Assets
    
    Sheet Assetsand Liabilities
    
    and LiabilitiesTotalAssets
    
    Investments
    
    MaximumExposure
    
    TotalAssets
    
    Investments
    
    MaximumExposureProject finance
    
    
    105,193
    
    
    
    438
    
    
    
    438
    
    
    
    97,977
    
    
    
    3
    
    
    
    3Guarantees
    
    
    -
    
    
    
    -
    
    
    
    26,998
    
    
    
    -
    
    
    
    -
    
    
    
    20,764Total
    
    
    105,193
    
    
    
    438
    
    
    
    27,436
    
    
    
    97,977
    
    
    
    3
    
    
    
    20,767
   11. Construction Contracts
  Year Ended March 312010
    
    2009Costs incurred on uncompleted contracts
    
    
    42,708
    
    
    
    37,048Estimated earnings
    
    
    2,245
    
    
    
    1,58044,953
    
    
    
    38,628Less billings to date
    
    
    (23,735
    )
    
    
    (21,820
    )21,218
    
    
    
    16,808Included in accompanying balance sheets under the following captions:Other current assets
    
    
    22,339
    
    
    
    21,417Other current liabilities
    
    
    (1,121
    )
    
    
    (4,609
    )21,218
    
    
    
    16,808
 F-20




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. Related Party Transactions
    13. Fair Value
  Fair value hierarchy
  Level 1
  Level 2
  Level 3
  Assets/liabilities measured at fair value on a recurring basis
  F-21




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements as of March 31, 2010 usingQuoted Prices in
    
    Significant Other
    
    SignificantActive Markets for
    
    Observable
    
    UnobservableIdentical Instruments
    
    Inputs
    
    Inputs(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total BalanceAssets:Marketable equity securities
    
    
    209,403
    
    
    
    -
    
    
    
    -
    
    
    
    209,403Debt securities
    
    
    81
    
    
    
    494
    
    
    
    -
    
    
    
    575Derivatives
    
    
    -
    
    
    
    5,027
    
    
    
    26,282
    
    
    
    31,309Total assets measured at fair value
    
    
    209,484
    
    
    
    5,521
    
    
    
    26,282
    
    
    
    241,287Liabilities:Derivatives
    
    
    -
    
    
    
    13,943
    
    
    
    676
    
    
    
    14,619Total liabilities measured at fair value
    
    
    -
    
    
    
    13,943
    
    
    
    676
    
    
    
    14,619
 Fair Value Measurements as of March 31, 2009 usingQuoted Prices in
    
    Significant Other
    
    SignificantActive Markets for
    
    Observable
    
    UnobservableIdentical Instruments
    
    Inputs
    
    Inputs(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total BalanceAssets:Marketable equity securities
    
    
    189,232
    
    
    
    -
    
    
    
    -
    
    
    
    189,232Debt securities
    
    
    -
    
    
    
    522
    
    
    
    -
    
    
    
    522Derivatives
    
    
    -
    
    
    
    3,082
    
    
    
    22,298
    
    
    
    25,380Total assets measured at fair value
    
    
    189,232
    
    
    
    3,604
    
    
    
    22,298
    
    
    
    215,134Liabilities:Derivatives
    
    
    -
    
    
    
    9,829
    
    
    
    1,198
    
    
    
    11,027Total liabilities measured at fair value
    
    
    -
    
    
    
    9,829
    
    
    
    1,198
    
    
    
    11,027
  Fair ValueMeasurements UsingSignificant UnobservableInputs (Level 3)DerivativesBalance at April 1, 2008
    
    
    44,556Total net losses (realized and unrealized) included in earnings
    
    
    (8,842
    )Purchase and settlements, net
    
    
    (14,614
    )Balance at March 31, 2009
    
    
    21,100Total net gains (realized and unrealized) included in earnings
    
    
    11,621Purchase and settlements, net
    
    
    (7,115
    )Balance at March 31, 2010
    
    
    25,606
   F-22




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Assets measured at fair value on a non-recurring basis
   14. Fair Value of Financial Instruments
  March 312010
    
    2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueForeign currency forward contracts
    
    
    4,512
    
    
    
    4,512
    
    
    
    227
    
    
    
    227Interest rate swaps
    
    
    (9,505
    )
    
    
    (9,505
    )
    
    
    (8,294
    )
    
    
    (8,294
    )Commodity related derivatives
    
    
    21,683
    
    
    
    21,683
    
    
    
    22,420
    
    
    
    22,420Long-term debt (including current portion)
    
    
    (872,567
    )
    
    
    (884,115
    )
    
    
    (933,518
    )
    
    
    (935,516
    )
  Derivative financial instruments
  Long-term debt (including current portion)
  15. Derivative Instruments
     F-23




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2010Notional AmountsForeign currency forward contracts:To sell foreign currencies (millions of US$)
    
    
    229To buy foreign currencies (millions of US$)
    
    
    2,137Interest rate swaps (millions of yen)
    
    
    238,627
 March 31, 2010Open PositionCommodity related derivatives:Crude oil and refined products (barrels)
    
    
    2,000Refined products (kiloliters)
    
    
    852,728
  Consolidated balance sheet: fair value of derivatives not designated as hedging instruments
 March 31, 2010
    
    
    
    March 31, 2010LiabilityType of Derivative
    
    Balance Sheet
    
    Asset Derivatives
    
    Balance Sheet
    
    DerivativesInstruments
    
    Classification
    
    - Fair Value *
    
    Classification
    
    - Fair value *Foreign currency forward
contracts:
    
    Other current assets
    
    
    5,027
    
    
    Other current liabilities
    
    
    (515
    )Interest rate swaps:
    
    Other current assets
    
    
    -
    
    
    Other current liabilities
    
    
    (7,540
    )Other non-current assets
    
    
    -
    
    
    Other non-current liabilities
    
    
    (1,965
    )Commodity related derivatives:
    
    Other current assets
    
    
    8,069
    
    
    Other current liabilities
    
    
    (1,564
    )Other non-current assets
    
    
    18,213
    
    
    Other non-current liabilities
    
    
    (3,035
    )Total
    
    
    
    
    31,309
    
    
    
    
    
    (14,619
    )
  Consolidated statement of operations: the effect of derivatives not designated as hedging
instruments
 Year EndedType of Derivative Contract
    
    Statement of Operations Classification
    
    March 31, 2010Foreign currency forward contracts:
    
    Foreign currency exchange gain (loss), net
    
    
    (6,041
    )Interest rate swaps:
    
    Other income (loss), net
    
    
    (1,707
    )Commodity related derivatives:
    
    Cost of sales
    
    
    7,018Total
    
    
    (730
    )
 16. Short-term Borrowings, Commercial Paper and Long-term Debt
   F-24




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Loans from banks, life insurance companies and government agencies, due
through March 2021 at interest rates ranging from 0.44% to 4.51%Secured
    
    
    18,104
    
    
    
    18,615Unsecured
    
    
    615,262
    
    
    
    635,556Unsecured bonds denominated in yen, due through June 2018, at interest rates
ranging from 0.90% to 2.48%
    
    
    180,240
    
    
    
    220,000Unsecured Eurobonds denominated in yen, due through April 2013, at interest
rates ranging from 1.16% to 1.62%
    
    
    4,982
    
    
    
    5,021Financing obligation associated with sale and leaseback (Note 6 Sale and
Leaseback Transactions)Secured
    
    
    38,673
    
    
    
    40,174Capital lease obligationsDue March 2010 to March 2017 with a weighted-average interest rate of 2.3%
    
    
    15,306
    
    
    
    14,152872,567
    
    
    
    933,518Less current portion
    
    
    (94,603
    )
    
    
    (90,167
    )777,964
    
    
    
    843,351
  Year ending March 31,2011
    
    
    94,6032012
    
    
    88,7892013
    
    
    109,4152014
    
    
    99,2232015
    
    
    107,777Thereafter
    
    
    372,760872,567
 Pledged assets
   March 312010
    
    2009Land
    
    
    253,100
    
    
    
    256,783Other property, plant and equipment, net
    
    
    305,314
    
    
    
    356,780Investment securities
    
    
    486
    
    
    
    451Long-term receivables (included in other non-current assets)
    
    
    556
    
    
    
    1,074559,456
    
    
    
    615,088
 Credit facilities
  F-25




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17. Pension and Severance Benefits
  Funded status
  Year Ended March 312010
    
    2009Change in benefit obligation:Benefit obligation at beginning of year
    
    
    240,545
    
    
    
    248,770Service cost
    
    
    6,125
    
    
    
    6,348Interest cost
    
    
    5,360
    
    
    
    5,081Effect of newly acquired consolidated subsidiaries
    
    
    -
    
    
    
    6,967Benefits paid
    
    
    (18,158
    )
    
    
    (15,048
    )Actuarial loss (gain)
    
    
    92
    
    
    
    (11,573
    )Benefit obligation at end of year
    
    
    233,964
    
    
    
    240,545Change in plan assets:Fair value of plan assets at beginning of year
    
    
    164,727
    
    
    
    189,904Actual return on plan assets
    
    
    21,342
    
    
    
    (31,807
    )Employer contributions
    
    
    16,966
    
    
    
    15,251Effect of newly acquired consolidated subsidiary
    
    
    -
    
    
    
    3,734Benefits paid
    
    
    (15,559
    )
    
    
    (12,355
    )Fair value of plan assets at end of year
    
    
    187,476
    
    
    
    164,727Funded status
    
    
    46,488
    
    
    
    75,818
  March 312010
    
    2009Other non-current assets
    
    
    11
    
    
    
    -Pension and severance benefits
    
    
    46,499
    
    
    
    75,818Weighted-average assumptions used to determine benefit obligations:Discount rate
    
    
    2.4%
    
    
    
    2.3%
   March 312010
    
    2009Plans with accumulated benefit obligations in excess of plan assets:Accumulated benefit obligations
    
    
    226,041
    
    
    
    234,504Plan assets
    
    
    184,753
    
    
    
    164,727Plans with projected benefit obligations in excess of plan assets:Projected benefit obligations
    
    
    231,252
    
    
    
    240,545Plan assets
    
    
    184,753
    
    
    
    164,727
 F-26




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Assumptions
  Year Ended March 312010
    
    2009
    
    2008Weighted-average assumptions:Discount rate
    
    
    2.3
    %
    
    
    2.1
    %
    
    
    2.2
    %Expected long-term return on plan assets
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.0
    %
  Net periodic benefit cost
  Year Ended March 312010
    
    2009
    
    2008Service cost
    
    
    6,125
    
    
    
    6,348
    
    
    
    6,279Interest cost
    
    
    5,360
    
    
    
    5,081
    
    
    
    5,264Expected return on plan assets for the period
    
    
    (4,915
    )
    
    
    (4,497
    )
    
    
    (5,334
    )Recognized actuarial loss
    
    
    5,449
    
    
    
    474
    
    
    
    Net periodic benefit cost
    
    
    12,019
    
    
    
    7,406
    
    
    
    6,209
    Plan assets
   F-27




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  TargetAllocationJapanese equity securities
    
    
    22
    %Japanese debt securities
    
    
    49
    %Foreign equity securities
    
    
    14
    %Foreign debt securities
    
    
    11
    %Life insurance company general accounts and other
    
    
    4
    %Total
    
    
    100
    %
   March 31, 2010Level 1
    
    Level 2
    
    Level 3
    
    TotalCash
    
    
    2,058
    
    
    
    -
    
    
    
    -
    
    
    
    2,058Equity securitiesJapanese equity securities
    
    
    6,870
    
    
    
    -
    
    
    
    -
    
    
    
    6,870Pooled funds  Japanese equity securities
    
    
    -
    
    
    
    39,798
    
    
    
    -
    
    
    
    39,798Pooled funds  Foreign equity securities
    
    
    -
    
    
    
    30,484
    
    
    
    -
    
    
    
    30,484Debt securitiesJapanese governmental bonds
    
    
    2,480
    
    
    
    -
    
    
    
    -
    
    
    
    2,480Japanese other bonds
    
    
    -
    
    
    
    966
    
    
    
    -
    
    
    
    966Pooled funds  Japanese bonds (a)
    
    
    -
    
    
    
    63,382
    
    
    
    -
    
    
    
    63,382Pooled funds  Foreign bonds (b)
    
    
    -
    
    
    
    20,010
    
    
    
    -
    
    
    
    20,010Life insurance company general accounts and other
    
    
    -
    
    
    
    21,428
    
    
    
    -
    
    
    
    21,428Total plan assets
    
    
    11,408
    
    
    
    176,068
    
    
    
    -
    
    
    
    187,476
 (a)
    
    These funds invest in approximately 75% Japanese government
bonds, 14% municipal bonds,
and 11% corporate bonds.(b)
    
    These funds invest mainly in foreign government bonds.
  Equity Securities:
  Debt Securities:
  Life insurance company general accounts:
  F-28




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Estimated future benefit payments
  Year ending March 31,2011
    
    
    15,7792012
    
    
    16,1732013
    
    
    16,8152014
    
    
    16,3552015
    
    
    15,8052016 through 2020
    
    
    72,145
 18. Commitments and Contingencies
 Litigation
  Purchase commitments
  Payments Due by Year Ending March 312011
    
    2012 - 2015
    
    2016 - beyond
    
    TotalFirm capital commitments
    
    
    11,378
    
    
    
    2,695
    
    
    
    -
    
    
    
    14,073Other purchase commitments
    
    
    7,391
    
    
    
    8,413
    
    
    
    6,809
    
    
    
    22,613
  
 Environmental liabilities
  Other contingencies
  F-29




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 19. Equity
       Year Ended March 312010
    
    2009
    
    2008Unrealized gains (losses) on securities:Balance at beginning of year
    
    
    17,887
    
    
    
    65,703
    
    
    
    103,224Unrealized losses on securities, net
    
    
    27,410
    
    
    
    (51,886
    )
    
    
    (54,971
    )Tax effects
    
    
    (11,383
    )
    
    
    21,363
    
    
    
    22,205Adjustments for year
    
    
    16,027
    
    
    
    (30,523
    )
    
    
    (32,766
    )Reclassification adjustments
    
    
    (2,755
    )
    
    
    (29,157
    )
    
    
    (8,016
    )Tax effects
    
    
    1,121
    
    
    
    11,864
    
    
    
    3,261Adjustments for year
    
    
    (1,634
    )
    
    
    (17,293
    )
    
    
    (4,755
    )Balance at end of year
    
    
    32,280
    
    
    
    17,887
    
    
    
    65,703Pension liability adjustment:Balance at beginning of year
    
    
    (29,485
    )
    
    
    (15,065
    )
    
    
    -Pension liability adjustment
    
    
    16,301
    
    
    
    (24,879
    )
    
    
    (25,517
    )Tax effects
    
    
    (6,633
    )
    
    
    10,179
    
    
    
    10,452Adjustments for year
    
    
    9,668
    
    
    
    (14,700
    )
    
    
    (15,065
    )Reclassification adjustments
    
    
    5,449
    
    
    
    474
    
    
    
    -Tax effects
    
    
    (2,217
    )
    
    
    (194
    )
    
    
    -Adjustments for year
    
    
    3,232
    
    
    
    280
    
    
    
    -Balance at end of year
    
    
    (16,585
    )
    
    
    (29,485
    )
    
    
    (15,065
    )Foreign currency translation adjustments:Balance at beginning of year
    
    
    (75,130
    )
    
    
    9,063
    
    
    
    11,116Foreign currency translation adjustments
    
    
    22,873
    
    
    
    (86,906
    )
    
    
    (2,026
    )Tax effects
    
    
    (1,672
    )
    
    
    2,713
    
    
    
    (27
    )Adjustments for year
    
    
    21,201
    
    
    
    (84,193
    )
    
    
    (2,053
    )Balance at end of year
    
    
    (53,929
    )
    
    
    (75,130
    )
    
    
    9,063Accumulated other comprehensive (loss) income - Total:Balance at beginning of year
    
    
    (86,728
    )
    
    
    59,701
    
    
    
    114,340Other comprehensive income (loss)
    
    
    69,278
    
    
    
    (192,354
    )
    
    
    (90,530
    )Tax effects
    
    
    (20,784
    )
    
    
    45,925
    
    
    
    35,891Adjustments for year
    
    
    48,494
    
    
    
    (146,429
    )
    
    
    (54,639
    )Balance at end of year
    
    
    (38,234
    )
    
    
    (86,728
    )
    
    
    59,701
 F-30




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Unrealized holding gains on securities
    
    
    27,950
    
    
    
    14,702Pension liability adjustment
    
    
    (15,272
    )
    
    
    (29,485
    )Foreign currency translation adjustment
    
    
    (48,740
    )
    
    
    (70,455
    )Accumulated other comprehensive loss
    
    
    (36,062
    )
    
    
    (85,238
    )
 20. Income Taxes
   Year Ended March 312010
    
    2009
    
    2008Income (loss) before income taxes
and equity in earnings of
affiliates:Domestic
    
    
    90,954
    
    
    
    (489,709
    )
    
    
    124,346Foreign
    
    
    24,917
    
    
    
    33,578
    
    
    
    93,907Total
    
    
    115,871
    
    
    
    (456,131
    )
    
    
    218,253Income taxes-current:Domestic
    
    
    (15,095
    )
    
    
    (8,614
    )
    
    
    (53,350
    )Foreign
    
    
    (17,517
    )
    
    
    (34,780
    )
    
    
    (35,565
    )Sub total
    
    
    (32,612
    )
    
    
    (43,394
    )
    
    
    (88,915
    )Income taxes-deferred:Domestic
    
    
    (17,453
    )
    
    
    200,877
    
    
    
    (4,585
    )Foreign
    
    
    5,307
    
    
    
    (9,316
    )
    
    
    (1,027
    )Sub total
    
    
    (12,146
    )
    
    
    191,561
    
    
    
    (5,612
    )(Provision) benefit for income taxes
    
    
    (44,758
    )
    
    
    148,167
    
    
    
    (94,527
    )
  Year Ended March 312010
    
    2009
    
    2008Statutory tax rate
    
    
    40.7
    %
    
    
    (40.7
    )%
    
    
    40.7
    %Increase (decrease) in taxes resulting from:Non-deductible expenses
    
    
    2.2
    
    
    
    0.7
    
    
    
    1.1Non-taxable dividend income
    
    
    (4.1
    )
    
    
    (1.1
    )
    
    
    (1.7
    )Difference in statutory tax rates
    
    
    (4.7
    )
    
    
    0.6
    
    
    
    1.8Changes in valuation allowance
    
    
    3.1
    
    
    
    9.3
    
    
    
    0.9Other
    
    
    1.4
    
    
    
    (1.3
    )
    
    
    0.5Effective tax rate
    
    
    38.6
    %
    
    
    (32.5
    )%
    
    
    43.3
    %
 F-31




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Deferred tax assets:Impairment of property, plant and equipment and oil and natural gas properties
    
    
    72,141
    
    
    
    77,336Pension and severance benefits
    
    
    19,642
    
    
    
    31,386Net operating loss carryforwards
    
    
    223,198
    
    
    
    233,703Impairment of investment securities
    
    
    42,194
    
    
    
    36,342Depreciation
    
    
    10,051
    
    
    
    9,809Allowance for doubtful accounts
    
    
    5,593
    
    
    
    5,080Other
    
    
    86,333
    
    
    
    77,404Gross deferred tax assets
    
    
    459,152
    
    
    
    471,060Less valuation allowance
    
    
    (151,201
    )
    
    
    (149,219
    )Total deferred tax assets
    
    
    307,951
    
    
    
    321,841Deferred tax liabilities:Business combinations
    
    
    (84,180
    )
    
    
    (84,297
    )Net unrealized appreciation on securities
    
    
    (39,250
    )
    
    
    (29,191
    )Tax reserves taken against differences in basis for depreciation and other properties
    
    
    (46,141
    )
    
    
    (50,669
    )Derivatives
    
    
    (8,999
    )
    
    
    (6,673
    )Excess amounts over the tax basis of investments in foreign subsidiaries and
affiliates
    
    
    (9,041
    )
    
    
    (5,468
    )Depreciation
    
    
    (25,476
    )
    
    
    (15,490
    )Other
    
    
    (65,597
    )
    
    
    (69,716
    )Gross deferred tax liabilities
    
    
    (278,684
    )
    
    
    (261,504
    )Net deferred tax assets
    
    
    29,267
    
    
    
    60,337
    F-32




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Loss
    
    Tax CreditYear ending March 31
    
    Carryforwards
    
    Carryforwards2011
    
    
    12,592
    
    
    
    7,3792012
    
    
    2,627
    
    
    
    1,6112013
    
    
    3,917
    
    
    
    13,7942014
    
    
    4,566
    
    
    
    -2015
    
    
    17,025
    
    
    
    -2016
    
    
    475,511
    
    
    
    -2017 and thereafter
    
    
    25,256
    
    
    
    -No definite expiration date
    
    
    -
    
    
    
    -Total
    
    
    541,494
    
    
    
    22,784
    UnrecognizedTax Benefits
    
    Interest
    
    PenaltiesBalance at April 1, 2007
    
    
    41
    
    
    
    1
    
    
    
    3Additions based on tax positions related to the current year
    
    
    744
    
    
    
    -
    
    
    
    55Additions for tax positions of prior years
    
    
    -
    
    
    
    1
    
    
    
    -Balance at March 31, 2008
    
    
    785
    
    
    
    2
    
    
    
    58Additions for tax positions of prior years
    
    
    -
    
    
    
    10
    
    
    
    -Settlements
    
    
    (489
    )
    
    
    -
    
    
    
    (36
    )Balance at March 31, 2009
    
    
    296
    
    
    
    12
    
    
    
    22Additions for tax positions of prior years
    
    
    -
    
    
    
    -
    
    
    
    -Settlements
    
    
    (296
    )
    
    
    (12
    )
    
    
    (22
    )Balance at March 31, 2010
    
    
    -
    
    
    
    -
    
    
    
    -
   21. Research and Development Costs
  Year Ended March 312010
    
    2009
    
    2008Refining and marketing
    
    
    13,442
    
    
    
    11,447
    
    
    
    11,740Others
    
    
    877
    
    
    
    864
    
    
    
    953Total research and development costs
    
    
    14,319
    
    
    
    12,311
    
    
    
    12,693
 22. Earnings per Share
   F-33




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year Ended March 312010
    
    2009
    
    2008Net income (loss) per share:Net income (loss) attributable to Nippon Oil Corporation (millions of yen)
    
    
    64,949
    
    
    
    (295,990
    )
    
    
    128,025Weighted average number of shares outstanding (thousands of shares)
    
    
    1,449,289
    
    
    
    1,450,858
    
    
    
    1,452,836Net income (loss) per share attributable to Nippon Oil Corporation (yen)
    
    
    44.81
    
    
    
    (204.01
    )
    
    
    88.12
  23. Segment Information
       F-34




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Refining
    
    Oil and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segmentsand
    
    Natural
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total after
    
    GAAP
    
    ConsolidatedMarketing
    
    Gas E&P
    
    Construction
    
    Other
    
    Eliminations
    
    Eliminations
    
    Adjustments
    
    TotalYear Ended March 31, 2010Revenues from third parties
    
    
    5,192,419
    
    
    
    143,432
    
    
    
    377,436
    
    
    
    60,992
    
    
    
    -
    
    
    
    5,774,279
    
    
    
    (792,998
    )
    
    
    4,981,281Depreciation, depletion
and amortization
    
    
    124,027
    
    
    
    40,486
    
    
    
    6,486
    
    
    
    615
    
    
    
    (795
    )
    
    
    170,819
    
    
    
    (21,129
    )
    
    
    149,690Ordinary income
    
    
    45,545
    
    
    
    43,246
    
    
    
    19,275
    
    
    
    5,819
    
    
    
    (582
    )
    
    
    113,303
    
    
    
    N/A
    
    
    
    N/ACapital expenditures
    
    
    111,935
    
    
    
    58,283
    
    
    
    8,468
    
    
    
    557
    
    
    
    -
    
    
    
    179,243
    
    
    
    12,157
    
    
    
    191,400Total assets
    
    
    3,417,939
    
    
    
    471,340
    
    
    
    350,953
    
    
    
    40,471
    
    
    
    (151,471
    )
    
    
    4,129,232
    
    
    
    51,007
    
    
    
    4,180,239Year Ended March 31, 2009Revenues from third parties
    
    
    6,760,526
    
    
    
    218,623
    
    
    
    356,540
    
    
    
    53,545
    
    
    
    -
    
    
    
    7,389,234
    
    
    
    (1,020,810
    )
    
    
    6,368,424Depreciation, depletion
and amortization
    
    
    123,881
    
    
    
    39,711
    
    
    
    6,318
    
    
    
    767
    
    
    
    (571
    )
    
    
    170,106
    
    
    
    1,977
    
    
    
    172,083Ordinary (loss) income
    
    
    (411,301
    )
    
    
    121,078
    
    
    
    8,599
    
    
    
    6,249
    
    
    
    (74
    )
    
    
    (275,449
    )
    
    
    N/A
    
    
    
    N/ACapital expenditures
    
    
    94,688
    
    
    
    75,163
    
    
    
    8,675
    
    
    
    991
    
    
    
    -
    
    
    
    179,517
    
    
    
    (5,897
    )
    
    
    173,620Total assets
    
    
    3,218,078
    
    
    
    489,758
    
    
    
    359,281
    
    
    
    51,549
    
    
    
    (148,936
    )
    
    
    3,969,730
    
    
    
    17,085
    
    
    
    3,986,815Year Ended March 31, 2008Revenues from third parties
    
    
    6,862,068
    
    
    
    234,889
    
    
    
    370,975
    
    
    
    56,058
    
    
    
    -
    
    
    
    7,523,990
    
    
    
    (975,181
    )
    
    
    6,548,809Depreciation, depletion
and amortization
    
    
    95,989
    
    
    
    45,229
    
    
    
    5,805
    
    
    
    5,579
    
    
    
    (252
    )
    
    
    152,350
    
    
    
    (1,867
    )
    
    
    150,483Ordinary income
    
    
    153,950
    
    
    
    111,300
    
    
    
    7,163
    
    
    
    5,207
    
    
    
    (1,953
    )
    
    
    275,667
    
    
    
    N/A
    
    
    
    N/ACapital expenditures
    
    
    86,555
    
    
    
    125,822
    
    
    
    10,650
    
    
    
    4,364
    
    
    
    -
    
    
    
    227,391
    
    
    
    35,259
    
    
    
    262,650Total assets
    
    
    3,711,223
    
    
    
    583,122
    
    
    
    395,324
    
    
    
    46,483
    
    
    
    (141,955
    )
    
    
    4,594,197
    
    
    
    124,980
    
    
    
    4,719,177
  GAAP adjustments to reconcile revenues
  GAAP adjustments to reconcile depreciation, depletion and amortization
 .
 F-35




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 GAAP and other adjustments to reconcile ordinary income (loss) to income (loss) before income taxes
and equity in earnings of affiliates
  Year Ended March 312010
    
    2009
    
    2008Ordinary income (loss)
    
    
    113,303
    
    
    
    (275,449
    )
    
    
    275,667GAAP adjustments or reclassifications:Impairment of oil and natural gas properties
    
    
    (7,921
    )
    
    
    (97,627
    )
    
    
    -Depreciation, depletion and amortization of oil and natural
gas properties
    
    
    2,794
    
    
    
    (20,064
    )
    
    
    (12,927
    )Other than temporary impairment of investment securities
    
    
    25
    
    
    
    (24,581
    )
    
    
    (2,916
    )Unrealized loss on derivative financial instruments, net
    
    
    4,796
    
    
    
    (21,067
    )
    
    
    (4,924
    )Sale and leaseback transaction
    
    
    -
    
    
    
    -
    
    
    
    (14,261
    )Equity in earnings of affiliates included in ordinary income
    
    
    2,470
    
    
    
    (10,362
    )
    
    
    (7,674
    )Impairment of property, plant and equipment
    
    
    (6,487
    )
    
    
    (12,124
    )
    
    
    (17,825
    )Other GAAP adjustment or reclassifications
    
    
    6,891
    
    
    
    5,143
    
    
    
    3,113Income (loss) before income taxes and equity in earnings of
affiliates
    
    
    115,871
    
    
    
    (456,131
    )
    
    
    218,253
 GAAP adjustments to reconcile total assets
  Geographic information
 Revenues
 Year Ended March 312010
    
    2009
    
    2008Japan
    
    
    4,356,108
    
    
    
    5,529,867
    
    
    
    5,814,583Overseas
    
    
    625,173
    
    
    
    838,557
    
    
    
    734,226Total
    
    
    4,981,281
    
    
    
    6,368,424
    
    
    
    6,548,809
  Property, plant, equipment and oil and natural gas properties, net
 March 312010
    
    2009Japan
    
    
    1,327,486
    
    
    
    1,343,682Overseas
    
    
    223,615
    
    
    
    204,452Total
    
    
    1,551,101
    
    
    
    1,548,134
 F-36




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 24. Subsequent Events
 Joint Share Transfer of Common Stock
       Number of shares of Nippon Mining common stock outstanding as of April 1, 2010
(thousands of shares)
    
    
    928,462Multiplied by Nippon Mining exchange ratio of 1.00 JX Holdings share for each share
of common stock of Nippon Mining
    
    
    1.00Multiplied by the market price of JX Holdings stock as of April 1, 2010 (yen)
    
    
    465Consideration transferred (millions of yen)
    
    
    431,735
 F-37




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##### Table of Contents



NIPPON OIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  April 1, 2010Fair value of total consideration transferred
    
    
    431,735Fair values of identifiable assets acquiredCash and cash equivalents
    
    
    87,170Accounts and notes receivable
    
    
    333,830Inventories
    
    
    460,691Property, plant, equipment and oil and natural gas properties
    
    
    764,416Intangible assets
    
    
    18,252Investment securities
    
    
    50,612Investment in affiliates
    
    
    238,494Other current and non-current assets
    
    
    136,742Deferred income taxes
    
    
    89,288Fair values of identifiable liabilities assumedAccounts and notes payable and accrued expenses
    
    
    (334,653
    )Short-term debt
    
    
    (346,448
    )Long-term
debt (including current portion)
    
    
    (438,546
    )Income and excise taxes payable
    
    
    (80,910
    )Other current and non-current liabilities
    
    
    (143,843
    )Deferred income taxes
    
    
    (118,414
    )Noncontrolling interests
    
    
    (68,164
    )Fair value of net assets acquired
    
    
    648,517Gain on the bargain purchase
    
    
    216,782
  Year Ended March 312010
    
    2009Pro forma revenues
    
    
    7,726,981
    
    
    
    9,863,277Pro forma net income (loss)
    
    
    115,282
    
    
    
    (321,054
    )
  
    
    additional depreciation and amortization that would have been charged assuming fair
value adjustments to property, plant, equipment and oil and gas properties, and intangible
assets had been applied at the date indicated above
    
    additional interest expense that would have been charged assuming fair value
adjustments to long-term debt had been applied from the dates indicated above
    
    estimated fair value adjustments as it relates to equity in earnings of affiliates
assuming fair value adjustments had been applied from the dates indicated above
    
    consequential tax effects.
   F-38




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##### Table of Contents



NIPPON
OIL CORPORATION
 
 SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND
PRODUCTION ACTIVITIES
   Capitalized costs relating to oil and natural gas producing activities
 Year Ended March 312009
    
    2008Oil and natural gas propertiesProved
    
    
    460,265
    
    
    
    431,351Unproved
    
    
    28,124
    
    
    
    66,963Total oil and natural gas properties
    
    
    488,389
    
    
    
    498,314Less accumulated depreciation and depletion
    
    
    (333,154
    )
    
    
    (240,882
    )Net oil and natural gas properties capitalized costs
    
    
    155,235
    
    
    
    257,432Proportional interest of net capitalized costs of equity companies
    
    
    80,608
    
    
    
    16,442
 Year Ended March 31, 2010Proportionalinterest ofConsolidated
    
    equitysubsidiaries
    
    companiesOil and natural gas propertiesProved
    
    
    517,051
    
    
    
    98,913Unproved
    
    
    36,042
    
    
    
    3,615Total oil and natural gas properties
    
    
    553,093
    
    
    
    102,528Less accumulated depreciation and depletion
    
    
    (388,192
    )
    
    
    (31,500
    )Net oil and natural gas properties capitalized costs
    
    
    164,901
    
    
    
    71,028
 F-39




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##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Costs incurred in oil and natural gas property acquisition, exploration and development activities
 OtherUnited
    
    
    
    
    
    United
    
    Southeast
    
    
    
    
    
    Inter-States
    
    Canada*1
    
    Kingdom
    
    Asia
    
    Oceania
    
    national*2
    
    TotalConsolidated subsidiariesDuring the year ended
March 31, 2010Exploration costs
    
    
    14,508
    
    
    
    -
    
    
    
    1
    
    
    
    9,066
    
    
    
    371
    
    
    
    1,555
    
    
    
    25,501Development costs
    
    
    -
    
    
    
    -
    
    
    
    5,607
    
    
    
    6,048
    
    
    
    1,172
    
    
    
    -
    
    
    
    12,827Total costs incurred for
consolidated subsidiaries
    
    
    14,508
    
    
    
    -
    
    
    
    5,608
    
    
    
    15,114
    
    
    
    1,543
    
    
    
    1,555
    
    
    
    38,328Equity companiesDuring the year ended
March 31, 2010Exploration costs
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    382
    
    
    
    -
    
    
    
    382Development costs
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,733
    
    
    
    6,917
    
    
    
    -
    
    
    
    8,650Total costs incurred for
equity companies
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,733
    
    
    
    7,299
    
    
    
    -
    
    
    
    9,032During the year ended
March 31, 2008Property acquisition costsProved
    
    
    21,039
    
    
    
    
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    21,039Unproved
    
    
    50,350
    
    
    
    
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    50,350Exploration costs
    
    
    22,088
    
    
    
    
    
    
    
    840
    
    
    
    6,970
    
    
    
    371
    
    
    
    4,149
    
    
    
    34,418Development costs
    
    
    -
    
    
    
    
    
    
    
    3,446
    
    
    
    14,260
    
    
    
    3,872
    
    
    
    -
    
    
    
    21,578Total costs incurred for
consolidated subsidiaries
    
    
    93,477
    
    
    
    
    
    
    
    4,286
    
    
    
    21,230
    
    
    
    4,243
    
    
    
    4,149
    
    
    
    127,385Proportional interest of
costs incurred of equity
companies
    
    
    -
    
    
    
    
    
    
    
    4,079
    
    
    
    28
    
    
    
    981
    
    
    
    -
    
    
    
    5,088During the year ended
March 31, 2009Exploration costs
    
    
    26,445
    
    
    
    
    
    
    
    2,588
    
    
    
    7,037
    
    
    
    1,304
    
    
    
    757
    
    
    
    38,131Development costs
    
    
    -
    
    
    
    
    
    
    
    2,388
    
    
    
    29,055
    
    
    
    1,734
    
    
    
    -
    
    
    
    33,177Total costs incurred for
consolidated subsidiaries
    
    
    26,445
    
    
    
    
    
    
    
    4,976
    
    
    
    36,092
    
    
    
    3,038
    
    
    
    757
    
    
    
    71,308Proportional interest of
costs incurred of equity
companies
    
    
    -
    
    
    
    
    
    
    
    916
    
    
    
    577
    
    
    
    85,164
    
    
    
    -
    
    
    
    86,657
 1
 2
 F-40




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##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Result of operations for oil and natural gas producing activities
 United
    
    
    
    
    
    United
    
    SoutheastStates
    
    Canada*
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalConsolidated subsidiariesYear ended March 31, 2010RevenueSales to third parties
    
    
    14,176
    
    
    
    26,573
    
    
    
    22,334
    
    
    
    63,471
    
    
    
    4,715
    
    
    
    131,269Production costs
    
    
    (6,635
    )
    
    
    (17,161
    )
    
    
    (6,287
    )
    
    
    (14,517
    )
    
    
    (2,073
    )
    
    
    (46,673
    )Depreciation and depletion
    
    
    (5,511
    )
    
    
    (3,426
    )
    
    
    (8,375
    )
    
    
    (15,805
    )
    
    
    (1,884
    )
    
    
    (35,001
    )Income tax expenses
    
    
    (710
    )
    
    
    (1,923
    )
    
    
    (3,836
    )
    
    
    (12,515
    )
    
    
    (227
    )
    
    
    (19,211
    )Results of producing activities
for consolidated subsidiaries
    
    
    1,320
    
    
    
    4,063
    
    
    
    3,836
    
    
    
    20,634
    
    
    
    531
    
    
    
    30,384Depreciation, depletion and
amortization per Barrel of oil
equivalent in yen
    
    
    1,388
    
    
    
    671
    
    
    
    1,969
    
    
    
    607
    
    
    
    2,710
    
    
    
    874Impairment due to full cost ceiling
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    7,112
    
    
    
    809
    
    
    
    7,921Equity companiesYear ended March 31, 2010RevenueSales to third parties
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    3,810
    
    
    
    5,657
    
    
    
    9,467Production costs
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (528
    )
    
    
    (1,029
    )
    
    
    (1,557
    )Depreciation and depletion
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (883
    )
    
    
    (1,130
    )
    
    
    (2,013
    )Income tax expenses
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (869
    )
    
    
    (1,749
    )
    
    
    (2,618
    )Results of producing activities for
equity companies
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,530
    
    
    
    1,749
    
    
    
    3,279Depreciation, depletion and
amortization per Barrel of oil
equivalent in yen
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,134
    
    
    
    1,218
    
    
    
    1,180Impairment due to full cost ceiling
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    16,022
    
    
    
    16,022
  F-41




---



##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Result of operations for oil and natural gas producing activities (continued)
 United
    
    
    
    
    
    United
    
    SoutheastStates
    
    Canada*
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalYear ended March 31, 2008RevenueSales to third parties
    
    
    28,965
    
    
    
    
    
    
    
    17,363
    
    
    
    92,904
    
    
    
    23,577
    
    
    
    162,809Production costs
    
    
    (7,635
    )
    
    
    
    
    
    
    (5,395
    )
    
    
    (11,357
    )
    
    
    (2,132
    )
    
    
    (26,519
    )Depreciation and depletion
    
    
    (17,164
    )
    
    
    
    
    
    
    (3,714
    )
    
    
    (23,868
    )
    
    
    (7,543
    )
    
    
    (52,289
    )Income tax expenses
    
    
    (1,458
    )
    
    
    
    
    
    
    (4,127
    )
    
    
    (20,885
    )
    
    
    (4,171
    )
    
    
    (30,641
    )Results of producing activities
for consolidated subsidiaries
    
    
    2,708
    
    
    
    
    
    
    
    4,127
    
    
    
    36,794
    
    
    
    9,731
    
    
    
    53,360Proportional interest in results
of producing activities of equity
companies
    
    
    -
    
    
    
    
    
    
    
    3,411
    
    
    
    1,719
    
    
    
    758
    
    
    
    5,888Depreciation, depletion and
amortization per Barrel of oil
equivalent in yen
    
    
    3,802
    
    
    
    
    
    
    
    1,422
    
    
    
    840
    
    
    
    3,027
    
    
    
    1,375Impairment due to full cost ceiling
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Year ended March 31, 2009RevenueSales to third parties
    
    
    27,494
    
    
    
    
    
    
    
    26,848
    
    
    
    105,332
    
    
    
    9,308
    
    
    
    168,982Production costs
    
    
    (8,124
    )
    
    
    
    
    
    
    (8,989
    )
    
    
    (19,367
    )
    
    
    (4,293
    )
    
    
    (40,773
    )Depreciation and depletion
    
    
    (15,983
    )
    
    
    
    
    
    
    (8,227
    )
    
    
    (24,847
    )
    
    
    (3,539
    )
    
    
    (52,596
    )Income tax expenses
    
    
    (1,185
    )
    
    
    
    
    
    
    (4,132
    )
    
    
    (22,131
    )
    
    
    (443
    )
    
    
    (27,891
    )Results of producing activities
for consolidated subsidiaries
    
    
    2,202
    
    
    
    
    
    
    
    5,500
    
    
    
    38,987
    
    
    
    1,033
    
    
    
    47,722Proportional interest in results
of producing activities of equity
companies
    
    
    -
    
    
    
    
    
    
    
    2,699
    
    
    
    1,929
    
    
    
    595
    
    
    
    5,223Depreciation, depletion and
amortization per Barrel of oil
equivalent in yen
    
    
    4,890
    
    
    
    
    
    
    
    2,117
    
    
    
    996
    
    
    
    3,793
    
    
    
    1,590Impairment due to full cost ceiling
    
    
    86,325
    
    
    
    
    
    
    
    698
    
    
    
    7,951
    
    
    
    2,653
    
    
    
    97,627
  F-42




---



##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Oil and natural gas reserves
       F-43




---



##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Crude oil, natural gas liquids and synthetic oil proved reserves
 SyntheticOilOil and NGL (Mbbl)
    
    (Mbbl)United
    
    United
    
    SoutheastStates
    
    Kingdom
    
    Asia
    
    Oceania
    
    Total
    
    Canada*
    
    TotalNet proved developed and
undeveloped reservesApril 1, 2007
    
    
    5,358
    
    
    
    6,758
    
    
    
    26,083
    
    
    
    4,019
    
    
    
    42,218
    
    
    
    
    
    
    
    42,218Revisions
    
    
    425
    
    
    
    36
    
    
    
    4,255
    
    
    
    238
    
    
    
    4,954
    
    
    
    
    
    
    
    4,954Purchases of minerals
in place
    
    
    10,306
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10,306
    
    
    
    
    
    
    
    10,306Extensions and
discoveries
    
    
    -
    
    
    
    -
    
    
    
    560
    
    
    
    -
    
    
    
    560
    
    
    
    
    
    
    
    560Production
    
    
    (2,268
    )
    
    
    (1,128
    )
    
    
    (6,087
    )
    
    
    (2,056
    )
    
    
    (11,539
    )
    
    
    
    
    
    
    (11,539
    )March 31, 2008
    
    
    13,821
    
    
    
    5,666
    
    
    
    24,811
    
    
    
    2,201
    
    
    
    46,499
    
    
    
    
    
    
    
    46,499Revisions
    
    
    129
    
    
    
    350
    
    
    
    932
    
    
    
    277
    
    
    
    1,688
    
    
    
    
    
    
    
    1,688Purchases of minerals
in place
    
    
    -
    
    
    
    7,424
    
    
    
    -
    
    
    
    -
    
    
    
    7,424
    
    
    
    
    
    
    
    7,424Production
    
    
    (1,324
    )
    
    
    (2,650
    )
    
    
    (6,093
    )
    
    
    (1,078
    )
    
    
    (11,145
    )
    
    
    
    
    
    
    (11,145
    )March 31, 2009
    
    
    12,626
    
    
    
    10,790
    
    
    
    19,650
    
    
    
    1,400
    
    
    
    44,466
    
    
    
    
    
    
    
    44,466Proportional interest
in proved reserves of
equity companiesAs of March 31, 2008
    
    
    -
    
    
    
    3,712
    
    
    
    1,785
    
    
    
    1,041
    
    
    
    6,538
    
    
    
    
    
    
    
    6,538As of March 31, 2009
    
    
    -
    
    
    
    -
    
    
    
    1,812
    
    
    
    8,174
    
    
    
    9,986
    
    
    
    
    
    
    
    9,986Net proved developed and
undeveloped reserves of
consolidated subsidiariesApril 1, 2009
    
    
    12,626
    
    
    
    10,790
    
    
    
    19,650
    
    
    
    1,400
    
    
    
    44,466
    
    
    
    -
    
    
    
    44,466Revisions
    
    
    845
    
    
    
    2,644
    
    
    
    3,519
    
    
    
    (457
    )
    
    
    6,551
    
    
    
    -
    
    
    
    6,551Extensions and discoveries
    
    
    -
    
    
    
    -
    
    
    
    1,923
    
    
    
    -
    
    
    
    1,923
    
    
    
    145,270
    
    
    
    147,193Production
    
    
    (1,487
    )
    
    
    (3,378
    )
    
    
    (5,298
    )
    
    
    (546
    )
    
    
    (10,709
    )
    
    
    (1,271
    )
    
    
    (11,980
    )March 31, 2010
    
    
    11,984
    
    
    
    10,056
    
    
    
    19,794
    
    
    
    397
    
    
    
    42,231
    
    
    
    143,999
    
    
    
    186,230Proportional interest in
proved reserves of equity
companiesApril 1, 2009
    
    
    -
    
    
    
    -
    
    
    
    1,812
    
    
    
    8,174
    
    
    
    9,986
    
    
    
    -
    
    
    
    9,986Revisions
    
    
    -
    
    
    
    -
    
    
    
    (122
    )
    
    
    160
    
    
    
    38
    
    
    
    -
    
    
    
    38Extensions and discoveries
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    7,608
    
    
    
    7,608
    
    
    
    -
    
    
    
    7,608Production
    
    
    -
    
    
    
    -
    
    
    
    (139
    )
    
    
    (1,813
    )
    
    
    (1,952
    )
    
    
    -
    
    
    
    (1,952
    )March 31, 2010
    
    
    -
    
    
    
    -
    
    
    
    1,551
    
    
    
    14,129
    
    
    
    15,680
    
    
    
    -
    
    
    
    15,680
  F-44




---



##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Crude
oil, natural gas liquids and synthetic oil proved reserves (continued)
 SyntheticOilOil and NGL (Mbbl)
    
    (Mbbl)United
    
    United
    
    SoutheastStates
    
    Kingdom
    
    Asia
    
    Oceania
    
    Total
    
    Canada*
    
    TotalProved developed
reserves, included
above, as of March 31,
2008Consolidated subsidiaries
    
    
    5,947
    
    
    
    4,784
    
    
    
    20,299
    
    
    
    2,201
    
    
    
    33,231
    
    
    
    
    
    
    
    33,231Equity companies
    
    
    -
    
    
    
    3,550
    
    
    
    1,455
    
    
    
    755
    
    
    
    5,760
    
    
    
    
    
    
    
    5,760Proved developed
reserves, included
above, as of March 31,
2009Consolidated subsidiaries
    
    
    4,783
    
    
    
    9,325
    
    
    
    17,482
    
    
    
    1,400
    
    
    
    32,990
    
    
    
    
    
    
    
    32,990Equity companies
    
    
    -
    
    
    
    -
    
    
    
    1,462
    
    
    
    6,362
    
    
    
    7,824
    
    
    
    
    
    
    
    7,824Proved undeveloped
reserves, included
above, as of March 31,
2009Consolidated subsidiaries
    
    
    7,843
    
    
    
    1,465
    
    
    
    2,168
    
    
    
    -
    
    
    
    11,476
    
    
    
    
    
    
    
    11,476Equity companies
    
    
    -
    
    
    
    -
    
    
    
    350
    
    
    
    1,812
    
    
    
    2,162
    
    
    
    
    
    
    
    2,162Total proved reserves at
March 31, 2009
    
    
    12,626
    
    
    
    10,790
    
    
    
    21,462
    
    
    
    9,574
    
    
    
    54,452
    
    
    
    
    
    
    
    54,452Proved developed
reserves, included
above, as of March 31,
2010Consolidated subsidiaries
    
    
    6,271
    
    
    
    9,878
    
    
    
    16,141
    
    
    
    397
    
    
    
    32,687
    
    
    
    143,999
    
    
    
    176,686Equity companies
    
    
    -
    
    
    
    -
    
    
    
    1,254
    
    
    
    5,041
    
    
    
    6,295
    
    
    
    -
    
    
    
    6,295Proved undeveloped
reserves, included
above, as of March 31,
2010Consolidated subsidiaries
    
    
    5,713
    
    
    
    178
    
    
    
    3,653
    
    
    
    -
    
    
    
    9,544
    
    
    
    -
    
    
    
    9,544Equity companies
    
    
    -
    
    
    
    -
    
    
    
    297
    
    
    
    9,088
    
    
    
    9,385
    
    
    
    -
    
    
    
    9,385Total proved reserves at
March 31, 2010
    
    
    11,984
    
    
    
    10,056
    
    
    
    21,345
    
    
    
    14,526
    
    
    
    57,911
    
    
    
    143,999
    
    
    
    201,910
  F-45




---



##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Natural
gas proved reserves
 Natural Gas (MMcf)United
    
    United
    
    SoutheastStates
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalNet proved developed and
undeveloped reservesApril 1, 2007
    
    
    111,249
    
    
    
    30,137
    
    
    
    1,411,370
    
    
    
    -
    
    
    
    1,552,756Revisions
    
    
    2,279
    
    
    
    5,299
    
    
    
    23,517
    
    
    
    -
    
    
    
    31,095Purchases of minerals in place
    
    
    6,185
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    6,185Extensions and discoveries
    
    
    -
    
    
    
    -
    
    
    
    107,326
    
    
    
    -
    
    
    
    107,326Production
    
    
    (17,037
    )
    
    
    (5,150
    )
    
    
    (186,606
    )
    
    
    -
    
    
    
    (208,793
    )-March 31, 2008
    
    
    102,676
    
    
    
    30,286
    
    
    
    1,355,607
    
    
    
    -
    
    
    
    1,488,569Revisions
    
    
    2,684
    
    
    
    (6,980
    )
    
    
    10,299
    
    
    
    -
    
    
    
    6,003Purchases of minerals in place
    
    
    -
    
    
    
    9,566
    
    
    
    -
    
    
    
    -
    
    
    
    9,566Production
    
    
    (11,571
    )
    
    
    (7,162
    )
    
    
    (103,821
    )
    
    
    -
    
    
    
    (122,554
    )-March 31, 2009
    
    
    93,789
    
    
    
    25,710
    
    
    
    1,262,085
    
    
    
    -
    
    
    
    1,381,584Proportional interest in proved
reserves of equity companiesAs of March 31, 2008
    
    
    -
    
    
    
    4,783
    
    
    
    112,424
    
    
    
    -
    
    
    
    117,207As of March 31, 2009
    
    
    -
    
    
    
    -
    
    
    
    101,266
    
    
    
    -
    
    
    
    101,266Net proved developed and
undeveloped reserves of
consolidated subsidiariesApril 1, 2009
    
    
    93,789
    
    
    
    25,710
    
    
    
    1,262,085
    
    
    
    -
    
    
    
    1,381,584Revisions
    
    
    3,982
    
    
    
    27,167
    
    
    
    101,551
    
    
    
    -
    
    
    
    132,700Extensions and discoveries
    
    
    -
    
    
    
    -
    
    
    
    69,638
    
    
    
    -
    
    
    
    69,638Production
    
    
    (15,970
    )
    
    
    (7,566
    )
    
    
    (158,821
    )
    
    
    -
    
    
    
    (182,357
    )March 31, 2010
    
    
    81,801
    
    
    
    45,311
    
    
    
    1,274,453
    
    
    
    -
    
    
    
    1,401,565Proportional interest in proved
reserves of equity companiesApril 1, 2009
    
    
    -
    
    
    
    -
    
    
    
    101,266
    
    
    
    -
    
    
    
    101,266Revisions
    
    
    -
    
    
    
    -
    
    
    
    (6,071
    )
    
    
    -
    
    
    
    (6,071
    )Extensions and discoveries
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    375,207
    
    
    
    375,207Production
    
    
    -
    
    
    
    -
    
    
    
    (4,097
    )
    
    
    -
    
    
    
    (4,097
    )March 31, 2010
    
    
    -
    
    
    
    -
    
    
    
    91,098
    
    
    
    375,207
    
    
    
    466,305
 F-46




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##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Natural
gas proved reserves (continued)
 Natural Gas (MMcf)United
    
    United
    
    SoutheastStates
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalProved developed reserves, included
above, as of March 31, 2008Consolidated subsidiaries
    
    
    67,669
    
    
    
    29,788
    
    
    
    449,931
    
    
    
    -
    
    
    
    547,388Equity companies
    
    
    -
    
    
    
    4,703
    
    
    
    87,405
    
    
    
    -
    
    
    
    92,108Proved developed reserves, included
above, as of March 31, 2009Consolidated subsidiaries
    
    
    59,949
    
    
    
    25,591
    
    
    
    444,142
    
    
    
    -
    
    
    
    529,682Equity companies
    
    
    -
    
    
    
    -
    
    
    
    77,884
    
    
    
    -
    
    
    
    77,884Proved undeveloped reserves, included
above, as of March 31, 2009Consolidated subsidiaries
    
    
    33,840
    
    
    
    119
    
    
    
    817,943
    
    
    
    -
    
    
    
    851,902Equity companies
    
    
    -
    
    
    
    -
    
    
    
    23,382
    
    
    
    -
    
    
    
    23,382Total proved reserves at March 31, 2009
    
    
    93,789
    
    
    
    25,710
    
    
    
    1,363,351
    
    
    
    -
    
    
    
    1,482,850Proved developed reserves, included
above, as of March 31, 2010Consolidated subsidiaries
    
    
    70,891
    
    
    
    45,285
    
    
    
    895,732
    
    
    
    -
    
    
    
    1,011,908Equity companies
    
    
    -
    
    
    
    -
    
    
    
    70,078
    
    
    
    -
    
    
    
    70,078Proved undeveloped reserves, included
above, as of March 31, 2010Consolidated subsidiaries
    
    
    10,910
    
    
    
    26
    
    
    
    378,721
    
    
    
    -
    
    
    
    389,657Equity companies
    
    
    -
    
    
    
    -
    
    
    
    21,020
    
    
    
    375,207
    
    
    
    396,227Total proved reserves at March 31, 2010
    
    
    81,801
    
    
    
    45,311
    
    
    
    1,365,551
    
    
    
    375,207
    
    
    
    1,867,870
 F-47




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##### Table of Contents

'

NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
 Standardized measure of discounted future cash flows
  United
    
    
    
    
    
    
    United
    
    SoutheastStates
    
    Canada*
    
    Kingdom
    
    Asia
    
    Oceania
    
    TotalConsolidated subsidiariesMarch 31, 2010Future cash inflows
    
    
    103,342
    
    
    
    1,024,184
    
    
    
    89,650
    
    
    
    299,510
    
    
    
    2,599
    
    
    
    1,519,285Future production and
development costs
    
    
    (55,411
    )
    
    
    (750,926
    )
    
    
    (30,296
    )
    
    
    (112,262
    )
    
    
    (5,126
    )
    
    
    (954,021
    )Future income tax expenses
    
    
    -
    
    
    
    (72,757
    )
    
    
    (25,462
    )
    
    
    (73,141
    )
    
    
    (382
    )
    
    
    (171,742
    )Future net cash flows
    
    
    47,931
    
    
    
    200,501
    
    
    
    33,892
    
    
    
    114,107
    
    
    
    (2,909
    )
    
    
    393,52210% annual discount for
estimated timing of cash
flows
    
    
    (9,576
    )
    
    
    (143,468
    )
    
    
    (7,784
    )
    
    
    (37,126
    )
    
    
    345
    
    
    
    (197,609
    )Standardized measure of
discounted future net
cash flows
    
    
    38,355
    
    
    
    57,033
    
    
    
    26,108
    
    
    
    76,981
    
    
    
    (2,564
    )
    
    
    195,913Equity companiesMarch 31, 2010Future cash inflows
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    39,871
    
    
    
    469,426
    
    
    
    509,297Future production and
development costs
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (15,484
    )
    
    
    (147,565
    )
    
    
    (163,049
    )Future income tax expenses
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (8,063
    )
    
    
    (92,716
    )
    
    
    (100,779
    )Future net cash flows
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    16,324
    
    
    
    229,145
    
    
    
    245,46910% annual discount for
estimated timing of cash
flows
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (5,412
    )
    
    
    (195,917
    )
    
    
    (201,329
    )Standardized measure of
discounted future net
cash flows
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10,912
    
    
    
    33,228
    
    
    
    44,140March 31, 2008Future cash inflows
    
    
    234,937
    
    
    
    
    
    
    
    77,135
    
    
    
    621,465
    
    
    
    23,267
    
    
    
    956,804Future production and
development costs
    
    
    (79,170
    )
    
    
    
    
    
    
    (34,586
    )
    
    
    (171,586
    )
    
    
    (14,883
    )
    
    
    (300,225
    )Future income tax expenses
    
    
    -
    
    
    
    
    
    
    
    (24,752
    )
    
    
    (202,635
    )
    
    
    (5,899
    )
    
    
    (233,286
    )Future net cash flows
    
    
    155,767
    
    
    
    
    
    
    
    17,797
    
    
    
    247,244
    
    
    
    2,485
    
    
    
    423,29310% annual discount for
estimated timing of cash
flows
    
    
    (47,502
    )
    
    
    
    
    
    
    (3,085
    )
    
    
    (92,242
    )
    
    
    616
    
    
    
    (142,213
    )Standardized measure of
discounted future net
cash flows
    
    
    108,265
    
    
    
    
    
    
    
    14,712
    
    
    
    155,002
    
    
    
    3,101
    
    
    
    281,080Proportional interest in
standardized measure of
discounted future net
cash flows of equity
companies
    
    
    -
    
    
    
    
    
    
    
    16,507
    
    
    
    13,098
    
    
    
    3,548
    
    
    
    33,153March 31, 2009Future cash inflows
    
    
    93,179
    
    
    
    
    
    
    
    62,846
    
    
    
    309,856
    
    
    
    7,232
    
    
    
    473,113Future production and
development costs
    
    
    (69,303
    )
    
    
    
    
    
    
    (33,748
    )
    
    
    (105,644
    )
    
    
    (6,878
    )
    
    
    (215,573
    )Future income tax expenses
    
    
    -
    
    
    
    
    
    
    
    (10,337
    )
    
    
    (90,500
    )
    
    
    (1,611
    )
    
    
    (102,448
    )Future net cash flows
    
    
    23,876
    
    
    
    
    
    
    
    18,761
    
    
    
    113,712
    
    
    
    (1,257
    )
    
    
    155,09210% annual discount for
estimated timing of cash
flows
    
    
    (6,174
    )
    
    
    
    
    
    
    (2,036
    )
    
    
    (40,014
    )
    
    
    764
    
    
    
    (47,460
    )Standardized measure of
discounted future net
cash flows
    
    
    17,702
    
    
    
    
    
    
    
    16,725
    
    
    
    73,698
    
    
    
    (493
    )
    
    
    107,632Proportional interest in
standardized measure of
discounted future net
cash flows of equity
companies
    
    
    -
    
    
    
    
    
    
    
    -
    
    
    
    12,087
    
    
    
    8,068
    
    
    
    20,155
  F-48




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##### Table of Contents



NIPPON OIL CORPORATION
SUPPLEMENTAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION AND PRODUCTION ACTIVITIES
   Year Ended March 312009
    
    2008Present value, beginning of the year
    
    
    281,080
    
    
    
    163,382Sales and transfers of oil and gas produced,
net of production costs
    
    
    (108,347
    )
    
    
    (100,943
    )Net changes in prices and production costs
    
    
    (276,910
    )
    
    
    183,094Extensions, discoveries and improved recovery
    
    
    -
    
    
    
    29,505Development costs incurred during the period
    
    
    39,343
    
    
    
    14,657Revisions of previous quantity estimates
    
    
    (4,288
    )
    
    
    48,858Change in estimated development costs
    
    
    11,557
    
    
    
    (62,995
    )Purchase or (sales) of minerals in place
    
    
    33,127
    
    
    
    57,751Accretion of discount
    
    
    57,673
    
    
    
    36,139Net change in income taxes
    
    
    76,900
    
    
    
    (33,476
    )Other
    
    
    (2,503
    )
    
    
    (54,892
    )End of the year
    
    
    107,632
    
    
    
    281,080Consolidated and equity interestsYear Ended March 31, 2010Proportional
    
    TotalConsolidated
    
    interest of
    
    consolidated andsubsidiaries
    

equity
companies
    
    equity interestsDiscounted future net cash flows as of March 31, 2009
    
    
    107,632
    
    
    
    20,155
    
    
    
    127,787Sales and transfers of oil and gas produced, net of
production costs
    
    
    (90,697
    )
    
    
    (14,091
    )
    
    
    (104,788
    )Net changes in prices and production costs
    
    
    33,248
    
    
    
    34,498
    
    
    
    67,746Extensions, discoveries and improved recovery
    
    
    108,853
    
    
    
    60,049
    
    
    
    168,902Development costs incurred during the period
    
    
    17,698
    
    
    
    6,461
    
    
    
    24,159Revisions of previous quantity estimates
    
    
    45,295
    
    
    
    (3,688
    )
    
    
    41,607Change in estimated development costs
    
    
    (7,943
    )
    
    
    (54,550
    )
    
    
    (62,493
    )Accretion of discount
    
    
    19,857
    
    
    
    3,965
    
    
    
    23,822Net change in income taxes
    
    
    (36,813
    )
    
    
    (8,786
    )
    
    
    (45,599
    )Other
    
    
    (1,217
    )
    
    
    127
    
    
    
    (1,090
    )Discounted future net cash flows as of March 31, 2010
    
    
    195,913
    
    
    
    44,140
    
    
    
    240,053
 F-49




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##### Table of Contents



SCHEDULE II
 NIPPON OIL CORPORATION
 VALUATION AND QUALIFING ACCOUNTS
  Balance at
    
    Additionsbeginning of
    
    charged to
    
    Bad debts
    
    Balance atyear
    
    expenses
    
    written off
    
    end of yearYear ended March 31, 2010Allowance for doubtful accounts
    
    
    9,942
    
    
    
    488
    
    
    
    (2,599
    )
    
    
    7,831Year ended March 31, 2009Allowance for doubtful accounts
    
    
    9,636
    
    
    
    2,344
    
    
    
    (2,038
    )
    
    
    9,942Year ended March 31, 2008Allowance for doubtful accounts
    
    
    11,200
    
    
    
    1,485
    
    
    
    (3,049
    )
    
    
    9,636
 Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atyear
    
    Additions
    
    Deductions
    
    Other
    
    end of yearYear ended March 31, 2010Valuation allowance- Deferred tax assets
    
    
    149,219
    
    
    
    14,616
    
    
    
    (16,887
    )
    
    
    4,253
    
    
    
    151,201Year ended March 31, 2009Valuation allowance- Deferred tax assets
    
    
    100,166
    
    
    
    50,388
    
    
    
    (8,705
    )
    
    
    7,370
    
    
    
    149,219Year ended March 31, 2008Valuation allowance- Deferred tax assets
    
    
    101,958
    
    
    
    2,744
    
    
    
    (4,536
    )
    
    
    -
    
    
    
    100,166
 F-50




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##### Table of Contents



F-51




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##### Table of Contents



NIPPON
MINING HOLDINGS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Millions of yen)
 March 312010
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    
    87,170
    
    
    
    113,947Time deposits
    
    
    1,692
    
    
    
    2,332Trade accounts receivable, net
    
    
    333,830
    
    
    
    220,301Inventories
    
    
    437,967
    
    
    
    330,008Deferred income taxes
    
    
    9,392
    
    
    
    22,447Prepaid expenses
    
    
    3,497
    
    
    
    3,259Other current assets
    
    
    79,180
    
    
    
    98,948Total current assets
    
    
    952,728
    
    
    
    791,242Non-current assets:Property, plant and equipment, net
    
    
    696,323
    
    
    
    713,582Investments in affiliated companies
    
    
    173,735
    
    
    
    158,183Investment securities:Securities available for sale  carried at fair value
    
    
    41,769
    
    
    
    36,270Non-marketable equity securities  carried at cost
    
    
    8,843
    
    
    
    13,732Deferred income taxes
    
    
    79,896
    
    
    
    79,572Other non-current assets
    
    
    60,853
    
    
    
    52,531Total non-current assets
    
    
    1,061,419
    
    
    
    1,053,870Total assets
    
    
    2,014,147
    
    
    
    1,845,112LIABILITIES AND EQUITYCurrent liabilities:Trade accounts payable
    
    
    252,835
    
    
    
    185,112Other payables and accrued expenses
    
    
    81,818
    
    
    
    79,657Accrued income taxes
    
    
    4,462
    
    
    
    4,542Excise taxes payable
    
    
    76,448
    
    
    
    70,742Short-term borrowings
    
    
    346,448
    
    
    
    313,323Current portion of long-term debt
    
    
    81,860
    
    
    
    45,612Other current liabilities
    
    
    50,192
    
    
    
    67,897Total current liabilities
    
    
    894,063
    
    
    
    766,885Non-current liabilities:Long-term debt, less current portion
    
    
    356,126
    
    
    
    375,025Defined benefit pension plans
    
    
    60,219
    
    
    
    65,675Deferred income taxes
    
    
    49,154
    
    
    
    49,505Other non-current liabilities
    
    
    22,990
    
    
    
    21,723Total non-current liabilities
    
    
    488,489
    
    
    
    511,928Total liabilities
    
    
    1,382,552
    
    
    
    1,278,813Commitments and contingent liabilitiesStockholders equity:Common stock, no par value
    
    
    73,920
    
    
    
    73,920(3,000,000 thousand shares authorized, 928,462 thousand shares issued)Capital surplus
    
    
    315,895
    
    
    
    314,397Retained earnings
    
    
    212,798
    
    
    
    175,741Accumulated other comprehensive loss
    
    
    (49,242
    )
    
    
    (57,559
    )Treasury stock, at cost
    
    
    (399
    )
    
    
    (883
    )At March 31, 2010  1,102 thousand sharesAt March 31, 2009  2,091 thousand sharesEquity attributable to Nippon Mining Holdings, Inc.
    
    
    552,972
    
    
    
    505,616Noncontrolling interests
    
    
    78,623
    
    
    
    60,683Total equity
    
    
    631,595
    
    
    
    566,299Total liabilities and equity
    
    
    2,014,147
    
    
    
    1,845,112
  F-52




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Millions of yen, except for per share data)
 Year ended March 312010
    
    2009
    
    2008Revenues
    
    
    2,745,700
    
    
    
    3,494,853
    
    
    
    3,803,926Costs and expenses, net:Cost of sales
    
    
    2,494,166
    
    
    
    3,425,076
    
    
    
    3,499,505Selling, general and administrative expenses
    
    
    178,441
    
    
    
    179,244
    
    
    
    185,791Loss on disposition of property, plant and equipment, net
    
    
    3,477
    
    
    
    8,548
    
    
    
    1,549Loss on impairment of property, plant and equipment
    
    
    2,075
    
    
    
    5,876
    
    
    
    1,268Total costs and expenses, net
    
    
    2,678,159
    
    
    
    3,618,744
    
    
    
    3,688,113Operating income (loss)
    
    
    67,541
    
    
    
    (123,891
    )
    
    
    115,813Interest expenses, net
    
    
    (10,074
    )
    
    
    (12,474
    )
    
    
    (12,305
    )Dividends received
    
    
    2,842
    
    
    
    2,425
    
    
    
    1,929Impairment loss on securities
    
    
    (5,354
    )
    
    
    (9,625
    )
    
    
    (473
    )Foreign currency exchange gains (losses), net
    
    
    922
    
    
    
    (1,186
    )
    
    
    4,156Equity in earnings of affiliated companies, net
    
    
    35,060
    
    
    
    59,356
    
    
    
    92,112Other (expense) income, net
    
    
    (3,092
    )
    
    
    (5,179
    )
    
    
    4,059Income (loss) before income taxes
    
    
    87,845
    
    
    
    (90,574
    )
    
    
    205,291Provision for income taxes:Current
    
    
    12,978
    
    
    
    15,684
    
    
    
    58,272Deferred
    
    
    10,391
    
    
    
    (91,645
    )
    
    
    20,822Net income (loss)
    
    
    64,476
    
    
    
    (14,613
    )
    
    
    126,197Less: Net income attributable to noncontrolling interests
    
    
    14,904
    
    
    
    9,726
    
    
    
    25,272Net income (loss) attributable to Nippon Mining Holdings, Inc.
    
    
    49,572
    
    
    
    (24,339
    )
    
    
    100,925Per share data:Net income (loss) attributable to Nippon Mining
Holdings, Inc.:
    
    Yen
    
    Yen
    
    YenBasic
    
    
    53.50
    
    
    
    (26.26
    )
    
    
    108.89Diluted
    
    
    53.44
    
    
    
    (26.26
    )
    
    
    108.81
  F-53




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##### Table of Contents



NIPPON
MINING HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Millions of yen)
 Year ended March 312010
    
    2009
    
    2008Cash flows from operating activities:Net income (loss)
    
    
    64,476
    
    
    
    (14,613
    )
    
    
    126,197Adjustments to reconcile net income (loss) to net cash provided by operating
activities:Depreciation, depletion and amortization
    
    
    62,563
    
    
    
    60,673
    
    
    
    52,731Loss on disposition of property, plant and equipment, net
    
    
    3,477
    
    
    
    8,548
    
    
    
    1,549Loss on impairment of property, plant and equipment
    
    
    2,075
    
    
    
    5,876
    
    
    
    1,268Loss on impairment of investment securities
    
    
    5,354
    
    
    
    9,625
    
    
    
    473Equity in earnings of affiliated companies, net of dividends received
    
    
    (4,390
    )
    
    
    (4,531
    )
    
    
    (26,247
    )Deferred income taxes
    
    
    10,391
    
    
    
    (91,645
    )
    
    
    20,822Changes in assets and liabilities:Accounts receivable
    
    
    (99,342
    )
    
    
    198,137
    
    
    
    (77,606
    )Inventories
    
    
    (104,683
    )
    
    
    236,503
    
    
    
    (62,862
    )Accounts payable
    
    
    72,236
    
    
    
    (104,869
    )
    
    
    40,015Accrued income taxes
    
    
    546
    
    
    
    (14,269
    )
    
    
    (5,803
    )Other, net
    
    
    (9,073
    )
    
    
    (8,435
    )
    
    
    (5,430
    )Net cash provided by operating activities
    
    
    3,630
    
    
    
    281,000
    
    
    
    65,107Cash flows from investing activities:Payments for acquisition of investment securities
    
    
    (10,029
    )
    
    
    (2,137
    )
    
    
    (8,859
    )Payments for acquisition of investments in affiliated companies
    
    
    -
    
    
    
    -
    
    
    
    (11,272
    )Proceeds from sales and maturities of investment securities
    
    
    3,875
    
    
    
    466
    
    
    
    9,260Payments for acquisition of property, plant and equipment
    
    
    (56,251
    )
    
    
    (71,534
    )
    
    
    (112,008
    )Proceeds from sales of property, plant and equipment
    
    
    9,698
    
    
    
    4,256
    
    
    
    6,126Other, net
    
    
    (10,236
    )
    
    
    (6,651
    )
    
    
    2,362Net cash used in investing activities
    
    
    (62,943
    )
    
    
    (75,600
    )
    
    
    (114,391
    )Cash flows from financing activities:Increase (decrease) in short-term borrowings and commercial paper, net
    
    
    31,121
    
    
    
    (153,483
    )
    
    
    92,470Proceeds from issuance of long-term debt
    
    
    60,376
    
    
    
    88,770
    
    
    
    120,185Repayments of long-term debt
    
    
    (46,194
    )
    
    
    (64,973
    )
    
    
    (113,291
    )Cash dividends paid:Common stock
    
    
    (12,515
    )
    
    
    (14,840
    )
    
    
    (14,841
    )Noncontrolling interests
    
    
    (5,837
    )
    
    
    (10,842
    )
    
    
    (18,448
    )Other, net
    
    
    5,286
    
    
    
    2,722
    
    
    
    1,199Net cash provided by (used in) financing activities
    
    
    32,237
    
    
    
    (152,646
    )
    
    
    67,274Effect of exchange rate changes on cash and cash equivalents
    
    
    299
    
    
    
    (3,958
    )
    
    
    432Net (decrease) increase in cash and cash equivalents
    
    
    (26,777
    )
    
    
    48,796
    
    
    
    18,422Cash and cash equivalents at beginning of year
    
    
    113,947
    
    
    
    65,151
    
    
    
    46,729Cash and cash equivalents at end of year
    
    
    87,170
    
    
    
    113,947
    
    
    
    65,151Supplemental data:Cash paid during the year for:Interest
    
    
    10,800
    
    
    
    14,705
    
    
    
    15,921Income taxes, net of refunds
    
    
    7,169
    
    
    
    45,583
    
    
    
    64,075Non-cash investing and financing activities:Capital leases
    
    
    149
    
    
    
    2,157
    
    
    
    990
  F-54




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 (Millions of yen, except for share information)
 Attributable to Nippon Mining HoldingsAccumulatedShares of
    
    
    
    
    
    
    
    
    
    
    
    
    
    other
    
    Treasury stock
    
    
    
    
    
    Non-common stock
    
    Common
    
    Capital
    
    Retained
    
    comprehensive
    
    Shares
    
    
    
    
    
    Comprehensive
    
    controlling(thousand)
    
    stock
    
    surplus
    
    earnings
    
    income (loss)
    
    (thousand)
    
    At cost
    
    income (loss)
    
    interests
    
    TotalBalance at March 31, 2007
    
    
    928,462
    
    
    
    73,920
    
    
    
    314,093
    
    
    
    129,007
    
    
    
    26,440
    
    
    
    1,553
    
    
    
    (570
    )
    
    
    
    
    
    
    64,333
    
    
    
    607,223Cumulative effect from the
adoption of new accounting
standard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (171
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (171
    )Shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207
    
    
    
    (204
    )
    
    
    
    
    
    
    
    
    
    
    (204
    )Shares issued
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    (64
    )
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    45Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    -Share-based compensation
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Cash dividends paid to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,448
    )
    
    
    (18,448
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,841
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,841
    )Equity transactions and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    905
    
    
    
    905Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,925
    
    
    
    25,272
    
    
    
    126,197Other comprehensive loss,
net of taxes:Unrealized losses on
investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,015
    )
    
    
    
    
    
    
    
    
    
    
    (15,015
    )
    
    
    (152
    )
    
    
    (15,167
    )Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,325
    )
    
    
    
    
    
    
    
    
    
    
    (3,325
    )
    
    
    
    
    
    
    (3,325
    )Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,135
    )
    
    
    
    
    
    
    
    
    
    
    (14,135
    )
    
    
    (1,429
    )
    
    
    (15,564
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,450
    
    
    
    23,691
    
    
    
    92,141Balance at March 31, 2008
    
    
    928,462
    
    
    
    73,920
    
    
    
    314,270
    
    
    
    214,920
    
    
    
    (6,035
    )
    
    
    1,649
    
    
    
    (717
    )
    
    
    
    
    
    
    70,481
    
    
    
    666,839Shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634
    
    
    
    (265
    )
    
    
    
    
    
    
    
    
    
    
    (265
    )Shares issued
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (112
    )
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    49Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    -Share-based compensation
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Cash dividends paid to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,842
    )
    
    
    (10,842
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,840
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,840
    )Equity transactions and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (503
    )
    
    
    (503
    )Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,339
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,339
    )
    
    
    9,726
    
    
    
    (14,613
    )Other comprehensive loss,
net of taxes:Unrealized losses on
investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,037
    )
    
    
    
    
    
    
    
    
    
    
    (8,037
    )
    
    
    
    
    
    
    (8,037
    )Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,933
    )
    
    
    
    
    
    
    
    
    
    
    (1,933
    )
    
    
    
    
    
    
    (1,933
    )Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41,554
    )
    
    
    
    
    
    
    
    
    
    
    (41,554
    )
    
    
    (8,179
    )
    
    
    (49,733
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,863
    )
    
    
    1,547
    
    
    
    (74,316
    )Balance at March 31, 2009
    
    
    928,462
    
    
    
    73,920
    
    
    
    314,397
    
    
    
    175,741
    
    
    
    (57,559
    )
    
    
    2,091
    
    
    
    (883
    )
    
    
    
    
    
    
    60,683
    
    
    
    566,299Shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203
    
    
    
    (80
    )
    
    
    
    
    
    
    
    
    
    
    (80
    )Shares issued
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    6Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (557
    )
    
    
    
    
    
    
    
    
    
    
    (1,177
    )
    
    
    557
    
    
    
    
    
    
    
    
    
    
    
    -Share-based compensation
    
    
    
    
    
    
    
    
    
    
    239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239Cash dividends paid to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,837
    )
    
    
    (5,837
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,515
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,515
    )Equity transactions and other
    
    
    
    
    
    
    
    
    
    
    1,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,010
    
    
    
    9,827Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,572
    
    
    
    14,904
    
    
    
    64,476Other comprehensive
income (loss), net of
taxes:Unrealized gains on
investment
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,465
    
    
    
    
    
    
    
    
    
    
    
    3,465
    
    
    
    54
    
    
    
    3,519Pension liability
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,010
    
    
    
    
    
    
    
    
    
    
    
    2,010
    
    
    
    
    
    
    
    2,010Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,842
    
    
    
    
    
    
    
    
    
    
    
    2,842
    
    
    
    809
    
    
    
    3,651Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,889
    
    
    
    15,767
    
    
    
    73,656Balance at March 31, 2010
    
    
    928,462
    
    
    
    73,920
    
    
    
    315,895
    
    
    
    212,798
    
    
    
    (49,242
    )
    
    
    1,102
    
    
    
    (399
    )
    
    
    
    
    
    
    78,623
    
    
    
    631,595
  F-55




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##### Table of Contents



NIPPON
MINING HOLDINGS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1. Nature of operations
     2. Summary of significant accounting policies
 Financial statements presentation
   Principles of consolidation
    Use of estimates
  Foreign currency translation
   Cash and cash equivalents
  F-56




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##### Table of Contents



NIPPON
MINING HOLDINGS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Allowance for doubtful accounts
   Investment securities
 Marketable equity securities
    Non-marketable equity securities
   Inventories
  Property, plant and equipment, net and depreciation
   Buildings
    
    7 - 60 yearsOil tanks
    
    7 - 15 yearsMachinery and equipment
    
    3 - 15 years
     F-57




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Impairment of long-lived assets
  Goodwill
  Asset retirement obligations
    Derivative financial instruments and hedging activities
   Environmental liabilities
  Defined benefit pension plans
  Share-based compensation
  Revenue recognition
  F-58




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Shipping and handling costs
  Research and development costs
  Income Taxes
   Earnings per share
   Change in Accounting Principles
  -
   F-59




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
    
    An expanded definition of oil and gas producing activities to include
nontraditional resources such as bitumen extracted from oil sands.
    
    The use of an average of the first-day-of-the-month price for the 12-month period,
rather than a year-end price for determining whether reserves can be produced
economically.
    
    Amended definitions of key terms such as reliable technology and reasonable
certainty which are used in estimating proved oil and gas reserve quantities.
    
    A requirement for disclosing separate information about reserve quantities and
financial statement amounts for geographical areas representing 15 percent or more of
proved reserves.
    
    Clarification that an entitys equity investments must be considered in determining
whether it has significant oil and gas activities and a requirement to disclose equity
method investments in the same level of detail as is required for consolidated
investments.
  New Accounting Standards
    Reclassifications
  3. Securitization
   F-60




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. Inventories
  March 312010
    
    2009Merchandise and finished goods
    
    
    113,937
    
    
    
    86,195Raw materials
    
    
    176,989
    
    
    
    126,664Work in process
    
    
    135,963
    
    
    
    106,534Supplies
    
    
    11,078
    
    
    
    10,615Total
    
    
    437,967
    
    
    
    330,008
  5. Property, plant and equipment, net
  March 312010
    
    2009Gross carrying
    
    Accumulated
    
    Gross carrying
    
    Accumulatedamount
    
    depreciation and
    
    amount
    
    depreciation andamortization
    
    
    
    amortizationLand
    
    
    200,179
    
    
    
    -
    
    
    
    204,696
    
    
    
    -Buildings and oil tanks
    
    
    487,344
    
    
    
    303,941
    
    
    
    483,091
    
    
    
    301,210Machinery and equipment
    
    
    920,081
    
    
    
    661,642
    
    
    
    894,848
    
    
    
    626,694Construction in progress
    
    
    10,898
    
    
    
    -
    
    
    
    14,273
    
    
    
    -Mineral rights
    
    
    36,159
    
    
    
    3,890
    
    
    
    35,801
    
    
    
    3,438Others
    
    
    44,671
    
    
    
    33,536
    
    
    
    43,252
    
    
    
    31,037Total
    
    
    1,699,332
    
    
    
    1,003,009
    
    
    
    1,675,961
    
    
    
    962,379
  6. Asset retirement obligations
  Balance at March 31, 2007
    
    
    10,942Liabilities incurred
    
    
    1,618Accretion
    
    
    56Settlement
    
    
    (736
    )Balance at March 31, 2008
    
    
    11,880Less current portion
    
    
    (3,260
    )Long-term portion
    
    
    8,620Balance at March 31, 2008
    
    
    11,880Liabilities incurred
    
    
    407Accretion
    
    
    64Settlement
    
    
    (2,737
    )Balance at March 31, 2009
    
    
    9,614Less current portion
    
    
    (2,692
    )Long-term portion
    
    
    6,922
 F-61




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Balance at March 31, 2009
    
    
    9,614Liabilities incurred
    
    
    4,327Revisions to cash flow estimates
    
    
    1,179Accretion
    
    
    71Settlement
    
    
    (2,967
    )Balance at March 31, 2010
    
    
    12,224Less current portion
    
    
    (3,414
    )Long-term portion
    
    
    8,810
   7. Loss on impairment of long-lived assets
   
  Year ended March 312010
    
    2009
    
    2008Land
    
    
    1,584
    
    
    
    968
    
    
    
    498Buildings and oil tanks
    
    
    -
    
    
    
    730
    
    
    
    25Machinery and equipment
    
    
    490
    
    
    
    4,172
    
    
    
    745Others
    
    
    1
    
    
    
    6
    
    
    
    -Total impairment loss on long-lived assets
    
    
    2,075
    
    
    
    5,876
    
    
    
    1,268
  F-62




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. Investments in affiliated companies
  The Groupspercentageof votingName of significant affiliated companies
    
    Nature of business
    
    rightsAbu Dhabi Oil Co., Ltd.
    
    Oil production
    
    
    31.50
    %United Petroleum Development Co., Ltd.
    
    Oil production
    
    
    45.00
    %Minera Los Pelambres
    
    Copper mining
    
    
    25.00
    %Japan Collahuasi Resources B.V.
    
    Investment in Collahuasi Mine
    
    
    30.00
    %JECO Corporation
    
    Investment in Escondida Mine
    
    
    20.00
    %LS-Nikko Copper Inc.
    
    Smelting, refining and sales of copper
    
    
    49.90
    %Hitachi Wire Rod Co., Ltd.
    
    Production and sale of copper wire rods
    
    
    20.00
    %Poongsan-Nikko Tin Plating Corporation
    
    Production of rolled materials
    
    
    40.00
    %COFCO, Ltd.
    
    Financing for Collahuasi Mine
    
    
    30.00
    %Japan Escondida Finance Corporation
    
    Financing for Escondida Mine
    
    
    20.00
    %Tatsuta Electric Wire and Cable Co., Ltd.
    
    Production and sale of electric wires and cables
    
    
    35.93
    %Toho Titanium Co., Ltd.
    
    Production and sale of titanium metals and
other products
    
    
    42.64
    %Maruwn Corporation
    
    Land transportation
    
    
    38.84
    %NTT DATA CCS Corporation
    
    Development of software, information processing
and sales systems
    
    
    40.00
    %
  March 31, 2010UnitedPetroleumAbu Dhabi
    
    Development
    
    LS-NikkoOil Co., Ltd.
    
    Co., Ltd.
    
    Copper Inc.
    
    Others
    
    TotalCurrent assets
    
    
    39,145
    
    
    
    38,105
    
    
    
    185,978
    
    
    
    69,075
    
    
    
    332,303Non-current assets
    
    
    23,881
    
    
    
    8,289
    
    
    
    49,559
    
    
    
    134,376
    
    
    
    216,105Total assets
    
    
    63,026
    
    
    
    46,394
    
    
    
    235,537
    
    
    
    203,451
    
    
    
    548,408Current liabilities
    
    
    12,500
    
    
    
    5,234
    
    
    
    128,971
    
    
    
    43,807
    
    
    
    190,512Non-current liabilities
    
    
    4,301
    
    
    
    4,019
    
    
    
    7,999
    
    
    
    49,737
    
    
    
    66,056Equity
    
    
    46,225
    
    
    
    37,141
    
    
    
    98,567
    
    
    
    109,907
    
    
    
    291,840Total liabilities and equity
    
    
    63,026
    
    
    
    46,394
    
    
    
    235,537
    
    
    
    203,451
    
    
    
    548,408
 Year ended March 31, 2010UnitedPetroleumAbu Dhabi
    
    Development
    
    LS-NikkoOil Co., Ltd.
    
    Co., Ltd.
    
    Copper Inc.
    
    Others
    
    TotalRevenues
    
    
    49,999
    
    
    
    29,434
    
    
    
    417,616
    
    
    
    109,882
    
    
    
    606,931Gross profit
    
    
    25,814
    
    
    
    14,940
    
    
    
    12,134
    
    
    
    33,820
    
    
    
    86,708Net income
    
    
    8,827
    
    
    
    3,731
    
    
    
    11,894
    
    
    
    10,069
    
    
    
    34,521
 March 31, 2009UnitedPetroleumAbu Dhabi
    
    Development
    
    LS-NikkoOil Co., Ltd.
    
    Co., Ltd.
    
    Copper Inc.
    
    Others
    
    TotalCurrent assets
    
    
    56,210
    
    
    
    35,310
    
    
    
    119,589
    
    
    
    67,359
    
    
    
    278,468Non-current assets
    
    
    25,227
    
    
    
    8,846
    
    
    
    42,958
    
    
    
    118,104
    
    
    
    195,135Total assets
    
    
    81,437
    
    
    
    44,156
    
    
    
    162,547
    
    
    
    185,463
    
    
    
    473,603Current liabilities
    
    
    8,055
    
    
    
    3,248
    
    
    
    71,856
    
    
    
    46,911
    
    
    
    130,070Non-current liabilities
    
    
    7,271
    
    
    
    4,182
    
    
    
    7,308
    
    
    
    40,541
    
    
    
    59,302Equity
    
    
    66,111
    
    
    
    36,726
    
    
    
    83,383
    
    
    
    98,011
    
    
    
    284,231Total liabilities and equity
    
    
    81,437
    
    
    
    44,156
    
    
    
    162,547
    
    
    
    185,463
    
    
    
    473,603
 F-63




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year ended March 31, 2009UnitedPetroleumAbu Dhabi
    
    Development
    
    LS-NikkoOil Co., Ltd.
    
    Co., Ltd.
    
    Copper Inc.
    
    Others
    
    TotalRevenues
    
    
    72,632
    
    
    
    48,491
    
    
    
    526,094
    
    
    
    132,312
    
    
    
    779,529Gross profit
    
    
    50,451
    
    
    
    35,151
    
    
    
    57,929
    
    
    
    12,453
    
    
    
    155,984Net income
    
    
    23,738
    
    
    
    14,882
    
    
    
    19,676
    
    
    
    37,903
    
    
    
    96,199
 Year ended March 31, 2008UnitedPetroleumAbu Dhabi
    
    Development
    
    LS-NikkoOil Co., Ltd.
    
    Co., Ltd.
    
    Copper Inc.
    
    Others
    
    TotalRevenues
    
    
    70,353
    
    
    
    43,772
    
    
    
    638,545
    
    
    
    130,083
    
    
    
    882,753Gross profit
    
    
    45,202
    
    
    
    28,308
    
    
    
    44,358
    
    
    
    17,562
    
    
    
    135,430Net income
    
    
    16,571
    
    
    
    11,529
    
    
    
    29,920
    
    
    
    67,297
    
    
    
    125,317
   March 312010
    
    2009Carrying amount
    
    
    35,639
    
    
    
    36,951Market value
    
    
    67,913
    
    
    
    39,160
  9. Investment securities
 Marketable equity securities
  March 312010
    
    2009Gross
    
    Gross
    
    
    
    
    
    
    
    
    
    Gross
    
    GrossAggregate
    
    unrealized
    
    unrealized
    
    
    
    
    
    Aggregate
    
    unrealized
    
    unrealizedCost
    
    fair value
    
    gains
    
    losses
    
    Cost
    
    fair value
    
    gains
    
    lossesAvailable-for-sale
securities:Equity securities
    
    
    28,550
    
    
    
    41,769
    
    
    
    13,241
    
    
    
    22
    
    
    
    28,869
    
    
    
    36,270
    
    
    
    7,526
    
    
    
    125
  F-64




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year ended March 312010
    
    2009
    
    2008Proceeds from sales of available-for-sale securities
    
    
    401
    
    
    
    466
    
    
    
    8,709Gross realized gains
    
    
    70
    
    
    
    190
    
    
    
    7,598Gross realized losses
    
    
    -
    
    
    
    1
    
    
    
    -
 
 March 31, 2010Less than 12 months
    
    12 months or longer
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossAggregate
    
    unrealized
    
    Aggregate
    
    unrealized
    
    Aggregate
    
    unrealizedfair value
    
    losses
    
    fair value
    
    losses
    
    fair value
    
    lossesEquity securities
    
    
    43
    
    
    
    1
    
    
    
    189
    
    
    
    21
    
    
    
    232
    
    
    
    22Total
    
    
    43
    
    
    
    1
    
    
    
    189
    
    
    
    21
    
    
    
    232
    
    
    
    22
 March 31, 2009Less than 12 months
    
    12 months or longer
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossAggregate
    
    unrealized
    
    Aggregate
    
    unrealized
    
    Aggregate
    
    unrealizedfair value
    
    losses
    
    fair value
    
    losses
    
    fair value
    
    lossesEquity securities
    
    
    502
    
    
    
    125
    
    
    
    -
    
    
    
    -
    
    
    
    502
    
    
    
    125Total
    
    
    502
    
    
    
    125
    
    
    
    -
    
    
    
    -
    
    
    
    502
    
    
    
    125
  Non-marketable equity securities
   10. Fair value
  Fair Value Hierarchy
  Level 1
  F-65




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Level 2
  Level 3
     Assets/Liabilities Measured at Fair Value on a Recurring Basis
  Fair value measurements as of March 31, 2010 usingQuoted pricesin active
    
    Significantmarkets for
    
    other
    
    Significantidentical
    
    observable
    
    unobservableinstruments
    
    inputs
    
    inputs(level 1)
    
    (level 2)
    
    (level 3)
    
    TotalAssetsMarketable equity securities
    
    
    41,769
    
    
    
    -
    
    
    
    -
    
    
    
    41,769Derivatives
    
    
    -
    
    
    
    7,231
    
    
    
    44
    
    
    
    7,275Total assets measured at fair value
    
    
    41,769
    
    
    
    7,231
    
    
    
    44
    
    
    
    49,044LiabilitiesDerivatives
    
    
    -
    
    
    
    10,088
    
    
    
    -
    
    
    
    10,088Total liabilities measured at fair value
    
    
    -
    
    
    
    10,088
    
    
    
    -
    
    
    
    10,088
 F-66




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Fair value measurements as of March 31, 2009 usingQuoted pricesin active
    
    Significantmarkets for
    
    other
    
    Significantidentical
    
    observable
    
    unobservableinstruments
    
    inputs
    
    inputs(level 1)
    
    (level 2)
    
    (level 3)
    
    TotalAssetsMarketable equity securities
    
    
    36,270
    
    
    
    -
    
    
    
    -
    
    
    
    36,270Derivatives
    
    
    -
    
    
    
    7,386
    
    
    
    1,554
    
    
    
    8,940Total assets measured at fair value
    
    
    36,270
    
    
    
    7,386
    
    
    
    1,554
    
    
    
    45,210LiabilitiesDerivatives
    
    
    -
    
    
    
    31,073
    
    
    
    -
    
    
    
    31,073Total liabilities measured at fair value
    
    
    -
    
    
    
    31,073
    
    
    
    -
    
    
    
    31,073
   CommodityderivativesBalance at April 1, 2008
    
    
    (4,019
    )Total net gains (realized and unrealized) included in earnings
    
    
    8,271Purchases and settlements, net
    
    
    (2,698
    )Balance at March 31, 2009
    
    
    1,554Total net gains (realized and unrealized) included in earnings
    
    
    355Purchases and settlements, net
    
    
    (1,865
    )Balance at March 31, 2010
    
    
    44
  Assets Measured at Fair Value on a Non-Recurring Basis
 Fair value measurements as of March 31, 2010 usingQuoted pricesin active
    
    Significantmarkets for
    
    other
    
    Significantidentical
    
    observable
    
    unobservableinstruments
    
    inputs
    
    inputs(level 1)
    
    (level 2)
    
    (level 3)
    
    TotalAssetsNon-marketable equity securities
    
    
    -
    
    
    
    -
    
    
    
    33
    
    
    
    33Property, plant and equipment, net
(held and use)
    
    
    -
    
    
    
    -
    
    
    
    5,982
    
    
    
    5,982Total assets measured at fair value
    
    
    -
    
    
    
    -
    
    
    
    6,015
    
    
    
    6,015
  11. Fair value of financial instruments
  F-67




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Carrying
    
    Fair
    
    Carrying
    
    FairAssets / (Liabilities)
    
    amount
    
    value
    
    amount
    
    valueForeign currency forward contracts
    
    
    1,853
    
    
    
    1,853
    
    
    
    319
    
    
    
    319Interest rate swaps
    
    
    (2,183
    )
    
    
    (2,183
    )
    
    
    (1,666
    )
    
    
    (1,666
    )Commodity related derivatives
    
    
    (2,483
    )
    
    
    (2,483
    )
    
    
    (20,786
    )
    
    
    (20,786
    )Long-term debt (including current portion)
    
    
    (437,986
    )
    
    
    (438,546
    )
    
    
    (420,637
    )
    
    
    (416,087
    )
  Derivative financial instruments
 Long-term debt (including current portion)
 12. Derivative instruments
     Notional amountMarch 31, 2010Foreign currency forward contracts
    
    Sell
    
    BuyMillions of US$
    
    
    777
    
    
    
    912Millions of TW$
    
    
    30
    
    
    
    -
 Notional amountMarch 31, 2010Interest rate swaps
    
    Pay fix/Receive float
    
    Pay float /Receive fixMillions of Yen
    
    
    141,504
    
    
    
    -
 Open PositionMarch 31, 2010Commodity related derivatives
    
    Long
    
    ShortGold and silver (thousands of tozs)
    
    
    2
    
    
    
    5,719Copper (thousands of tons)
    
    
    51
    
    
    
    46Liquefied petroleum gas (thousands of tons)
    
    
    6
    
    
    
    -Crude oil and refined products (thousands of
kiloliters)
    
    
    -
    
    
    
    14
 F-68




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated balance sheets: fair value of derivatives not designated as hedging instruments
 March 31, 2010
    
    
    
    March 31, 2010Type of derivative
    
    Balance sheets
    
    Asset derivatives -
    
    Balance sheets
    
    Liability derivatives -instruments
    
    classification
    
    fair value *
    
    classification
    
    fair value *Foreign currency
forward contracts
    
    Other current assets
    
    
    2,396
    
    
    Other current liabilities
    
    
    543Interest rate swaps
    
    Other current assets
    
    
    -
    
    
    Other current liabilities
    
    
    2,183Commodity related
derivatives
    
    Other current assets
    
    
    4,879
    
    
    Other current liabilities
    
    
    7,362Total
    
    
    7,275
    
    
    Total
    
    
    10,088
    Consolidated statements of operations: the effect of derivatives not designated as hedging instruments
 Type of
    
    Statements of operations
    
    Year endedderivative
    
    classification
    
    March 31, 2010contract
    
    
    
    Gain / (Loss)Foreign currency forward
contracts
    
    Foreign currency exchange losses, net
    
    
    (5,466
    )Interest rate swaps
    
    Other expense, net
    
    
    (1,692
    )Commodity related
derivatives
    
    Cost of  sales
    
    
    3,966Total
    
    
    (3,192
    )
 13. Short-term borrowings and long-term debt
   March 312010
    
    2009Unsecured bonds, due through June 2018, at interest rates ranging from 1.37% to 2.32%
    
    
    35,000
    
    
    
    35,000Loans from banks, life insurance companies and government agencies, due through
March 2019 at interest rates ranging from 0.53% to 5.67%Secured
    
    
    29,994
    
    
    
    45,627Unsecured
    
    
    307,153
    
    
    
    270,139Financing obligation associated with the sale and leaseback of the corporate
headquarters property (See Note 14)Secured
    
    
    47,114
    
    
    
    48,995Capital lease obligations
    
    
    18,725
    
    
    
    20,876437,986
    
    
    
    420,637Less current portion
    
    
    (81,860
    )
    
    
    (45,612
    )356,126
    
    
    
    375,025
 F-69




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Property, plant and equipment, net
    
    
    181,491
    
    
    
    233,146Investment securities
    
    
    3,910
    
    
    
    3,893185,401
    
    
    
    237,039
  Year ending March 31,2011
    
    
    81,8602012
    
    
    40,8982013
    
    
    105,6072014
    
    
    74,0512015
    
    
    54,893Thereafter
    
    
    80,677437,986
   14. Leases
 As lessee
   March 312010
    
    2009Buildings and oil tanks
    
    
    18,002
    
    
    
    17,875Machinery and equipment
    
    
    12,931
    
    
    
    13,178Others
    
    
    402
    
    
    
    402Less accumulated amortization
    
    
    (20,985
    )
    
    
    (18,184
    )Total
    
    
    10,350
    
    
    
    13,271
  Year ending March 31,2011
    
    
    4,1482012
    
    
    3,1392013
    
    
    2,5052014
    
    
    1,9062015
    
    
    1,307Thereafter
    
    
    6,080Total minimum lease payments
    
    
    19,085Less amounts representing interest
    
    
    (360
    )Present value of net minimum lease payments included in Long-term debt
    
    
    18,725Less current portion
    
    
    (4,148
    )Long-term capital lease obligations
    
    
    14,577
   F-70




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Year ending March 31,2011
    
    
    3,0042012
    
    
    2,7752013
    
    
    2,3362014
    
    
    2,0932015
    
    
    1,948Thereafter
    
    
    13,974Total minimum future rentals
    
    
    26,130
  Sale and leaseback transaction
    15. Environmental liabilities
   16. Pension plans
  Funded status
  F-71




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year ended March 312010
    
    2009
    
    2008Change in benefit obligation:Benefit obligation at April 1
    
    
    82,944
    
    
    
    89,075
    
    
    
    86,359Service cost
    
    
    2,433
    
    
    
    2,059
    
    
    
    2,563Interest cost
    
    
    1,691
    
    
    
    1,523
    
    
    
    1,706Effect from the sale of a subsidiary
    
    
    -
    
    
    
    (2,548
    )
    
    
    -Benefits paid
    
    
    (5,533
    )
    
    
    (6,228
    )
    
    
    (4,230
    )Actuarial (gains) losses
    
    
    (1,335
    )
    
    
    (937
    )
    
    
    2,677Benefit obligation at March 31
    
    
    80,200
    
    
    
    82,944
    
    
    
    89,075Change in plan assets:Fair value of plan assets at April 1
    
    
    19,436
    
    
    
    23,518
    
    
    
    25,002Actual return on plan assets
    
    
    2,585
    
    
    
    (3,442
    )
    
    
    (2,092
    )Employer contributions
    
    
    3,000
    
    
    
    3,499
    
    
    
    3,228Effect from the sale of a subsidiary
    
    
    -
    
    
    
    (910
    )
    
    
    -Benefits paid
    
    
    (2,690
    )
    
    
    (3,229
    )
    
    
    (2,620
    )Fair value of plan assets at March 31
    
    
    22,331
    
    
    
    19,436
    
    
    
    23,518Funded status
    
    
    (57,869
    )
    
    
    (63,508
    )
    
    
    (65,557
    )Weighted-average assumptions used to
determine benefit obligation
(percent):Discount rate
    
    
    2.35  2.4
    %
    
    
    2.1  2.35
    %
    
    
    1.8  2.2
    %Rate of compensation increase
    
    
    2.97  3.58
    %
    
    
    2.97  3.57
    %
    
    
    2.97  3.86
    %
  March 312010
    
    2009Other non-current assets
    
    
    281
    
    
    
    301Defined benefit pension plans
    
    
    (58,150
    )
    
    
    (63,809
    )(57,869
    )
    
    
    (63,508
    )
   March 312010
    
    2009Projected benefit obligation
    
    
    80,200
    
    
    
    82,944Accumulated benefit obligation
    
    
    79,591
    
    
    
    82,366Fair value of plan assets
    
    
    22,331
    
    
    
    19,436
 Assumptions and net periodic pension cost
  Year ended March 312010
    
    2009
    
    2008Weighted-average assumptions:Discount rate
    
    
    2.1  2.35
    %
    
    
    1.8  2.2
    %
    
    
    2.1  2.25
    %Expected return on plan assets
    
    
    2.5
    %
    
    
    2.5
    %
    
    
    2.5
    %Rate of compensation increase
    
    
    2.97  3.57
    %
    
    
    2.97  3.86
    %
    
    
    2.97  3.93
    %Service cost
    
    
    2,433
    
    
    
    2,059
    
    
    
    2,563Interest cost
    
    
    1,691
    
    
    
    1,523
    
    
    
    1,706Expected return on plan assets
    
    
    (458
    )
    
    
    (527
    )
    
    
    (578
    )Recognized actuarial losses
    
    
    249
    
    
    
    -
    
    
    
    -Net periodic benefit cost
    
    
    3,915
    
    
    
    3,055
    
    
    
    3,691
  F-72




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Plan assets
      Target allocationDomestic equity securities
    
    
    23
    %Domestic debt securities
    
    
    36
    %Foreign equity securities
    
    
    15
    %Foreign debt securities
    
    
    9
    %Life insurance company general accounts and other
    
    
    17
    %Total
    
    
    100
    %
   March 31, 2010Level 1
    
    Level 2
    
    Level 3
    
    TotalEquity securitiesPooled funds
 Domestic equity securities
    
    
    -
    
    
    
    5,049
    
    
    
    -
    
    
    
    5,049Pooled funds
 Foreign equity securities
    
    
    -
    
    
    
    3,521
    
    
    
    -
    
    
    
    3,521Debt securitiesPooled funds
 Domestic bonds (a)
    
    
    -
    
    
    
    7,117
    
    
    
    -
    
    
    
    7,117Pooled funds
 Foreign bonds (b)
    
    
    -
    
    
    
    1,732
    
    
    
    -
    
    
    
    1,732Life insurance company general accounts and other
    
    
    -
    
    
    
    4,912
    
    
    
    -
    
    
    
    4,912Total plan
assets
    
    
    -
    
    
    
    22,331
    
    
    
    -
    
    
    
    22,331
 (a)
    
    These funds invest in approximately 70% Japanese government bonds, 15% municipal bonds
and 15% corporate bonds.(b)
    
    These funds invest mainly in foreign government bonds.
     F-73




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Estimated future benefit payments
  Year ending March 31,2011
    
    
    4,3702012
    
    
    4,1642013
    
    
    4,6872014
    
    
    4,6772015
    
    
    3,8712016-2020
    
    
    21,552
 17. Share-based compensation
      Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise Price
    
    
    Contractual
    
    
    ValueShares
    
    
    (Yen)
    
    
    Term (Years)
    
    
    (Millions of Yen)Balance at March 31, 2009
    
    
    968,500
    
    
    
    1Granted
    
    
    534,000
    
    
    
    1Exercised
    
    
    (1,177,500
    )
    
    
    1Expired/Forfeited
    
    
    (325,000
    )
    
    
    1Balance at March 31, 2010
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Exercisable at March 31, 2010
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
  F-74




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year ended March 312010
    
    2009
    
    2008Expected volatility
    
    
    50
    %
    
    
    40
    %
    
    
    38
    %Expected term (in years)
    
    
    4
    .0
    
    
    4
    .0
    
    
    4
    .0Expected dividend rate
    
    
    2
    .794%
    
    
    2
    .744%
    
    
    1
    .618%Risk-free rate
    
    
    0
    .793%
    
    
    1
    .363%
    
    
    1
    .452%
   18. Equity
     F-75




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year ended March 312010
    
    2009
    
    2008Unrealized holding gains (losses) on securities:Balance at beginning of year
    
    
    4,147
    
    
    
    12,184
    
    
    
    27,351Pre-tax amount of unrealized holding gains
(losses) on securities, net
    
    
    6,302
    
    
    
    (18,207
    )
    
    
    (19,818
    )Deferred income taxes
    
    
    (2,739
    )
    
    
    7,335
    
    
    
    7,301Adjustments for year (after income tax effect)
    
    
    3,563
    
    
    
    (10,872
    )
    
    
    (12,517
    )Pre-tax amount of reclassification adjustments
    
    
    (74
    )
    
    
    4,988
    
    
    
    (4,524
    )Deferred income taxes
    
    
    30
    
    
    
    (2,153
    )
    
    
    1,874Adjustments for year (after income tax effect)
    
    
    (44
    )
    
    
    2,835
    
    
    
    (2,650
    )Balance at end of year
    
    
    7,666
    
    
    
    4,147
    
    
    
    12,184Pension liability adjustment:Balance at beginning of year
    
    
    (4,176
    )
    
    
    (2,243
    )
    
    
    1,082Pre-tax amount of pension liability adjustment
    
    
    3,308
    
    
    
    (3,123
    )
    
    
    (5,438
    )Deferred income taxes
    
    
    (1,446
    )
    
    
    1,190
    
    
    
    2,113Adjustments for year (after income tax effect)
    
    
    1,862
    
    
    
    (1,933
    )
    
    
    (3,325
    )Pre-tax amount of reclassification adjustments
    
    
    249
    
    
    
    -
    
    
    
    -Deferred income taxes
    
    
    (101
    )
    
    
    -
    
    
    
    -Adjustments for year (after income tax effect)
    
    
    148
    
    
    
    -
    
    
    
    -Balance at end of year
    
    
    (2,166
    )
    
    
    (4,176
    )
    
    
    (2,243
    )Foreign currency translation adjustments:Balance at beginning of year
    
    
    (65,267
    )
    
    
    (15,534
    )
    
    
    30Pre-tax amount of translation adjustments
    
    
    3,978
    
    
    
    (54,690
    )
    
    
    (17,622
    )Deferred income taxes
    
    
    (327
    )
    
    
    4,974
    
    
    
    2,058Adjustments for year (after income tax effect)
    
    
    3,651
    
    
    
    (49,716
    )
    
    
    (15,564
    )Pre-tax amount of reclassification adjustments
    
    
    -
    
    
    
    (17
    )
    
    
    -Adjustments for year (after income tax effect)
    
    
    -
    
    
    
    (17
    )
    
    
    -Balance at end of year
    
    
    (61,616
    )
    
    
    (65,267
    )
    
    
    (15,534
    )
  March 312010
    
    2009Unrealized holding gains on securities
    
    
    7,599
    
    
    
    4,134Pension liability adjustment
    
    
    (2,166
    )
    
    
    (4,176
    )Foreign currency translation adjustment
    
    
    (54,675
    )
    
    
    (57,517
    )Accumulated other comprehensive loss
    
    
    (49,242
    )
    
    
    (57,559
    )
 19. Related party transactions
   March 312010
    
    2009Trade accounts receivable
    
    
    586
    
    
    
    351Trade accounts payable
    
    
    6,781
    
    
    
    5,661
 Year ended March 312010
    
    2009
    
    2008Revenues
    
    
    15,917
    
    
    
    24,499
    
    
    
    28,386Purchases
    
    
    104,797
    
    
    
    107,633
    
    
    
    164,798
 F-76




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    20. Income taxes
   Year ended March 312010
    
    2009
    
    2008Income (loss) before income taxes:Japan
    
    
    74,667
    
    
    
    (106,992
    )
    
    
    156,250Foreign
    
    
    13,178
    
    
    
    16,418
    
    
    
    49,041Total
    
    
    87,845
    
    
    
    (90,574
    )
    
    
    205,291Provision for income taxes-current:Japan
    
    
    7,544
    
    
    
    8,664
    
    
    
    47,004Foreign
    
    
    5,434
    
    
    
    7,020
    
    
    
    11,268Total
    
    
    12,978
    
    
    
    15,684
    
    
    
    58,272Provision for income taxes-deferred:Japan
    
    
    10,656
    
    
    
    (88,358
    )
    
    
    13,686Foreign
    
    
    (265
    )
    
    
    (3,287
    )
    
    
    7,136Total
    
    
    10,391
    
    
    
    (91,645
    )
    
    
    20,822Total income tax expense (benefit)
    
    
    23,369
    
    
    
    (75,961
    )
    
    
    79,094
  Year ended March 312010
    
    2009
    
    2008Statutory tax rate
    
    
    40.7
    %
    
    
    (40.7
    )        %
    
    
    40.7
    %Increase (reduction) in taxes resulting from:Change in deferred tax liabilities on undistributed earnings
of subsidiaries and affiliates
    
    
    8.2
    
    
    
    (14.4
    )*
    
    
    10.7Effect of equity in earnings of affiliated companies
    
    
    (16.9
    )
    
    
    (25.4
    )**
    
    
    (18.2
    )Elimination of dividend income
    
    
    1.3
    
    
    
    2.4
    
    
    
    1.6Taxation on intercompany transfer of subsidiary stocks
    
    
    4.5
    
    
    
    (0.0
    )
    
    
    0.0Different tax rate applied to income from foreign
subsidiaries
    
    
    (1.7
    )
    
    
    (0.7
    )
    
    
    (0.7
    )Unrecognized tax benefits
    
    
    0.0
    
    
    
    (2.7
    )
    
    
    1.0Tax benefit resulting from net losses in a foreign subsidiary
    
    
    -
    
    
    
    (13.5
    )***
    
    
    -Change in valuation allowances
    
    
    (12.9
    )
    
    
    15.0
    
    
    
    2.0Other
    
    
    3.4
    
    
    
    (3.9
    )
    
    
    1.4Effective income tax rate
    
    
    26.6
    %
    
    
    (83.9
    )        %
    
    
    38.5
    %
 *
    
    In March 2009, under the FY2009 Tax Reform in Japan, a new tax law for dividends received
from foreign subsidiaries and affiliates was enacted, which treats 95% of the dividends paid
by foreign subsidiaries and affiliates as non-taxable income in place of an indirect foreign
tax credit system. As a consequence of the enactment of the new tax law, certain deferred tax
liabilities previously provided on undistributed earnings of foreign subsidiaries and
affiliates in conformity with previous tax law were reversed as of March 31, 2009.**
    
    Relates to the effect of equity in earnings of affiliated companies included in Income (loss)
before income taxes.***
    
    Non-recurring tax benefit resulting from net losses in a foreign subsidiary that became
deductible in 2009 as provided by the corporate tax law in Japan.
 F-77




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 312010
    
    2009Deferred tax assets:Operating loss carryforwards
    
    
    102,319
    
    
    
    109,446Accrued pension and severance costs
    
    
    23,710
    
    
    
    25,848Impairment of land
    
    
    21,424
    
    
    
    22,117Unrealized losses on securities
    
    
    12,839
    
    
    
    11,264Sale and leaseback
    
    
    14,774
    
    
    
    15,316Property, plant and equipment
    
    
    6,186
    
    
    
    5,186Inventories
    
    
    666
    
    
    
    2,782Accrued bonus
    
    
    2,672
    
    
    
    2,721Losses on derivative instruments
    
    
    996
    
    
    
    8,291Other
    
    
    21,999
    
    
    
    25,182Gross deferred tax assets
    
    
    207,585
    
    
    
    228,153Less valuation allowance
    
    
    (71,472
    )
    
    
    (88,787
    )Total deferred tax assets
    
    
    136,113
    
    
    
    139,366Deferred tax liabilities:Business combinations
    
    
    (33,912
    )
    
    
    (36,436
    )Undistributed earnings of foreign subsidiaries and affiliates
    
    
    (22,061
    )
    
    
    (18,069
    )Property, plant and equipment
    
    
    (17,744
    )
    
    
    (13,061
    )Unrealized gains on securities
    
    
    (9,274
    )
    
    
    (7,158
    )Tax purpose reserves regulated by Japanese tax laws
    
    
    (5,072
    )
    
    
    (5,068
    )Other
    
    
    (7,916
    )
    
    
    (7,105
    )Gross deferred tax liabilities
    
    
    (95,979
    )
    
    
    (86,897
    )Net deferred tax assets
    
    
    40,134
    
    
    
    52,469
    March 312010
    
    2009Current assets:Deferred income taxes
    
    
    9,392
    
    
    
    22,447Non-current assets:Deferred income taxes
    
    
    79,896
    
    
    
    79,572Current liabilities:Other current liabilities
    
    
    -
    
    
    
    (45
    )Non-current liabilities:Deferred income taxes
    
    
    (49,154
    )
    
    
    (49,505
    )Net deferred tax assets
    
    
    40,134
    
    
    
    52,469
   F-78




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Unrecognizedtax benefits
    
    Interest
    
    PenaltiesBalance at April 1, 2007
    
    
    163
    
    
    
    2
    
    
    
    6Additions based on tax positions related to the current year
    
    
    2,314
    
    
    
    -
    
    
    
    172Additions for tax positions of prior years
    
    
    -
    
    
    
    2
    
    
    
    -Balance at March 31, 2008
    
    
    2,477
    
    
    
    4
    
    
    
    178Balance at April 1, 2008
    
    
    2,477
    
    
    
    4
    
    
    
    178Additions based on tax positions related to the current year
    
    
    -
    
    
    
    -
    
    
    
    -Additions for tax positions of prior years
    
    
    -
    
    
    
    59
    
    
    
    -Settlements
    
    
    (994
    )
    
    
    -
    
    
    
    (68
    )Balance at March 31, 2009
    
    
    1,483
    
    
    
    63
    
    
    
    110Balance at April 1, 2009
    
    
    1,483
    
    
    
    63
    
    
    
    110Additions based on tax positions related to the current year
    
    
    4
    
    
    
    6
    
    
    
    -Additions for tax positions of prior years
    
    
    -
    
    
    
    -
    
    
    
    -Settlements
    
    
    (708
    )
    
    
    (30
    )
    
    
    (52
    )Balance at March 31, 2010
    
    
    779
    
    
    
    39
    
    
    
    58
   21. Earnings per share
  F-79




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year ended March 312010
    
    2009
    
    2008Net income per shareNet income (loss) attributable to Nippon
Mining Holdings, Inc.
    
    
    49,572
    
    
    
    (24,339
    )
    
    
    100,925Weighted-average number of shares
outstanding (thousands of shares)
    
    
    926,538
    
    
    
    926,698
    
    
    
    926,832Net income (loss) per share attributable
to Nippon Mining Holdings, Inc. (yen)
    
    
    53.50
    
    
    
    (26.26
    )
    
    
    108.89Net income per share  assuming dilutionNet income (loss) attributable to Nippon
Mining Holdings, Inc.
    
    
    49,572
    
    
    
    (24,339
    )
    
    
    100,925Weighted-average number of shares
outstanding (thousands of shares)
    
    
    926,538
    
    
    
    926,698
    
    
    
    926,832Effect of stock options
    
    
    1,057
    
    
    
    -
    
    
    
    662Weighted-average number of common stock
outstanding  assuming dilution
    
    
    927,595
    
    
    
    926,698
    
    
    
    927,494Net income (loss) per share attributable
to Nippon Mining Holdings, Inc. (yen)
    
    
    53.44
    
    
    
    (26.26
    )
    
    
    108.81
  22. Segment information
     Petroleum business
 
    
    Petroleum exploration & development consists of exploration, development and
production of oil and gas, mainly through equity method investments.
    
    Petroleum refining & marketing- consists of oil refining and production of various
petroleum products at refineries, as well as the supplying of petroleum-related products
and services through the Groups service station network.
 F-80




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
    
    Petrochemicals consists of production and marketing of petrochemicals, ranging from
basic chemical products to specialty chemical products, propylene and aromatic products for
use as raw materials in synthetic fibers and resins.
 Metals business
 
    
    Copper resource development -is primarily made up of the Groups equity method
investments in copper mines in South America, and also includes mines in the development
stage.
    
    Copper smelting & refining -engages in the smelting and refining of copper and other
nonferrous metals as refineries located in Japan. This segment also incorporates an equity
method investment in a smelter in South Korea.
    
    Recycling & environmental services and other consists of recycling of nonferrous
metals and environmental services such as disposal of industrial waste as well as other
related activities.
    
    Electronic materials engages in production and marketing of IT-related and other electronic materials,
such as copper foils, sputtering targets, precision rolled products and precision fabricated products.
 Other operations
 
    
    Other operations consists of manufacturing of titanium products, engineering and
electronic cables businesses, as well as corporate divisions and the subsidiaries bearing
support functions.
    Petroleumexploration &
    
    Petroleum refining
    
    
    
    
    
    Totaldevelopment
    
    & marketing
    
    Petrochemicals
    
    petroleum businessYear ended March 31, 2010Income before
special items
    
    
    5,770
    
    
    
    20,008
    
    
    
    437
    
    
    
    26,215Equity in earnings of
affiliated companies,
net
    
    
    4,491
    
    
    
    -
    
    
    
    -
    
    
    
    4,491Year ended March 31, 2009Income (loss) before
special items
    
    
    9,307
    
    
    
    (102,033
    )
    
    
    (12,424
    )
    
    
    (105,150
    )Equity in earnings of
affiliated companies,
net
    
    
    4,697
    
    
    
    -
    
    
    
    -
    
    
    
    4,697Year ended March 31, 2008Income (loss) before
special items
    
    
    12,885
    
    
    
    55,270
    
    
    
    (308
    )
    
    
    67,847Equity in
earnings (losses) of
affiliated companies,
net
    
    
    7,654
    
    
    
    (524
    )
    
    
    -
    
    
    
    7,130
 F-81




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Recycling &Copper resource
    
    Copper smelting &
    
    environmental
    
    Electronic
    
    Totaldevelopment
    
    refining
    
    services and other
    
    materials
    
    metals businessYear ended March 31, 2010Income before
special items
    
    
    27,445
    
    
    
    5,049
    
    
    
    5,963
    
    
    
    8,990
    
    
    
    47,447Equity in earnings of
affiliated companies,
net
    
    
    28,761
    
    
    
    4,514
    
    
    
    17
    
    
    
    5
    
    
    
    33,297Year ended March 31, 2009Income (loss) before
special items
    
    
    26,458
    
    
    
    14,234
    
    
    
    4,889
    
    
    
    (17,069
    )
    
    
    28,512Equity in
earnings (losses) of
affiliated companies,
net
    
    
    33,707
    
    
    
    10,014
    
    
    
    (28
    )
    
    
    (13
    )
    
    
    43,680Year ended March 31, 2008Income (loss) before
special items
    
    
    57,275
    
    
    
    42,869
    
    
    
    14,309
    
    
    
    (1,058
    )
    
    
    113,395Equity in earnings of
affiliated companies,
net
    
    
    66,123
    
    
    
    14,765
    
    
    
    16
    
    
    
    19
    
    
    
    80,923
 GAAPOther
    
    Elimi-
    
    Segment
    
    adjust-
    
    Consoli-Petroleum
    
    Metals
    
    operations
    
    nations
    
    total
    
    ments
    
    dated totalYear ended March 31, 2010Revenues
    
    
    2,417,724
    
    
    
    780,705
    
    
    
    70,342
    
    
    
    (35,033
    )
    
    
    3,233,738
    
    
    
    (488,038
    )
    
    
    2,745,700Income before special
items
    
    
    26,215
    
    
    
    47,447
    
    
    
    2,409
    
    
    
    (2,104
    )
    
    
    73,967
    
    
    
    N/A
    
    
    
    N/ADepreciation and
amortization
    
    
    47,425
    
    
    
    25,682
    
    
    
    5,819
    
    
    
    112
    
    
    
    79,038
    
    
    
    (16,475
    )
    
    
    62,563Equity in earnings of
affiliated companies, net
    
    
    4,491
    
    
    
    33,297
    
    
    
    433
    
    
    
    -
    
    
    
    38,221
    
    
    
    (3,161
    )
    
    
    35,060Capital expenditures
    
    
    27,064
    
    
    
    31,736
    
    
    
    23,462
    
    
    
    110
    
    
    
    82,372
    
    
    
    (22,906
    )
    
    
    59,466Total assets
    
    
    1,208,977
    
    
    
    683,998
    
    
    
    727,536
    
    
    
    (553,004
    )
    
    
    2,067,507
    
    
    
    (53,360
    )
    
    
    2,014,147Year ended March 31, 2009Revenues
    
    
    3,116,129
    
    
    
    902,127
    
    
    
    84,710
    
    
    
    (37,907
    )
    
    
    4,065,059
    
    
    
    (570,206
    )
    
    
    3,494,853Income (loss) before special
items
    
    
    (105,150
    )
    
    
    28,512
    
    
    
    9,666
    
    
    
    (461
    )
    
    
    (67,433
    )
    
    
    N/A
    
    
    
    N/ADepreciation and
amortization
    
    
    45,271
    
    
    
    29,570
    
    
    
    5,718
    
    
    
    31
    
    
    
    80,590
    
    
    
    (19,917
    )
    
    
    60,673Equity in earnings of
affiliated companies, net
    
    
    4,697
    
    
    
    43,680
    
    
    
    520
    
    
    
    -
    
    
    
    48,897
    
    
    
    10,459
    
    
    
    59,356Capital expenditures
    
    
    32,035
    
    
    
    42,303
    
    
    
    22,990
    
    
    
    143
    
    
    
    97,471
    
    
    
    (22,536
    )
    
    
    74,935Total assets
    
    
    1,091,869
    
    
    
    600,939
    
    
    
    681,884
    
    
    
    (488,609
    )
    
    
    1,886,083
    
    
    
    (40,971
    )
    
    
    1,845,112Year ended March 31, 2008Revenues
    
    
    3,193,934
    
    
    
    1,119,645
    
    
    
    76,538
    
    
    
    (50,645
    )
    
    
    4,339,472
    
    
    
    (535,546
    )
    
    
    3,803,926Income before special items
    
    
    67,847
    
    
    
    113,395
    
    
    
    11,254
    
    
    
    (470
    )
    
    
    192,026
    
    
    
    N/A
    
    
    
    N/ADepreciation and
amortization
    
    
    35,725
    
    
    
    26,506
    
    
    
    519
    
    
    
    113
    
    
    
    62,863
    
    
    
    (10,132
    )
    
    
    52,731Equity in earnings of
affiliated companies, net
    
    
    7,130
    
    
    
    80,923
    
    
    
    3,874
    
    
    
    -
    
    
    
    91,927
    
    
    
    185
    
    
    
    92,112Capital expenditures
    
    
    68,773
    
    
    
    30,943
    
    
    
    645
    
    
    
    487
    
    
    
    100,848
    
    
    
    4,811
    
    
    
    105,659Total assets
    
    
    1,409,106
    
    
    
    769,690
    
    
    
    677,197
    
    
    
    (604,785
    )
    
    
    2,251,208
    
    
    
    (17,009
    )
    
    
    2,234,199
  GAAP adjustments to reconcile segment revenues to Consolidated revenues
 F-82




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NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 GAAP adjustments to reconcile segment income (loss) before special items to Consolidated income
before income taxes
 Year ended March 312010
    
    2009
    
    2008Total segments income (loss) before special items
    
    
    73,967
    
    
    
    (67,433
    )
    
    
    192,026GAAP adjustments and reclassifications:Depreciation and depletion of property, plant and
equipment
    
    
    11,388
    
    
    
    11,166
    
    
    
    6,258Derivative financial instruments
    
    
    17,944
    
    
    
    (27,026
    )
    
    
    (2,761
    )Reversal for land revaluation
    
    
    6,583
    
    
    
    3,140
    
    
    
    2,082Adjustment of Impairment loss on securities
    
    
    -
    
    
    
    (7,629
    )
    
    
    (26
    )Pension plan
    
    
    865
    
    
    
    5,830
    
    
    
    3,056Equity in earnings of affiliated companies
    
    
    (2,092
    )
    
    
    7,736
    
    
    
    (327
    )Loss on impairment of property, plant and equipment
    
    
    (2,075
    )
    
    
    (5,876
    )
    
    
    (1,268
    )Impairment loss on securities
    
    
    (5,354
    )
    
    
    (9,625
    )
    
    
    (473
    )Other GAAP adjustment and reclassifications
    
    
    (13,381
    )
    
    
    (857
    )
    
    
    6,724Consolidated income (loss) before income taxes
    
    
    87,845
    
    
    
    (90,574
    )
    
    
    205,291
 GAAP adjustments to reconcile segment depreciation and amortization to Consolidated depreciation
and amortization
 GAAP adjustments to reconcile segment equity in earnings of affiliated companies, net, to
Consolidated equity in earnings of affiliated companies, net
 GAAP adjustments to reconcile segment total assets to Consolidated total assets
 Geographic information
 Revenues
 Year ended March 312010
    
    2009
    
    2008Japan
    
    
    2,175,857
    
    
    
    2,816,712
    
    
    
    3,143,317Overseas
    
    
    569,843
    
    
    
    678,141
    
    
    
    660,609Total
    
    
    2,745,700
    
    
    
    3,494,853
    
    
    
    3,803,926
  Long-lived assets
 March 312010
    
    2009
    
    2008Japan
    
    
    631,835
    
    
    
    645,145
    
    
    
    649,787Overseas
    
    
    65,303
    
    
    
    69,634
    
    
    
    79,223Total
    
    
    697,138
    
    
    
    714,779
    
    
    
    729,010
 23. Contingencies
 Pledged assets
  March 312010
    
    2009Time deposits
    
    
    1,005
    
    
    
    930Property, plant and equipment, net*
    
    
    117,593
    
    
    
    85,469Investment securities and Investments in affiliated
companies
    
    
    5,984
    
    
    
    5,689Other non-current assets
    
    
    169
    
    
    
    366124,751
    
    
    
    92,454
  F-83




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Purchase commitments
  Other contingencies
  F-84




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
 
 SUPPLEMENTAL INFORMATION ON OIL PRODUCING ACTIVITIES (UNAUDITED)
  Capitalized costs relating to oil producing activities
  Year ended March 31, 2010Oil propertiesProved
    
    
    99,514Unproved
    
    
    -Total oil properties
    
    
    99,514Less accumulated depreciation and depletion
    
    
    (85,506
    )Proportionate interest in net capitalized costs of equity method investments
    
    
    14,008Year ended March 31, 2009Proportionate interest in net capitalized costs of equity method investments
    
    
    13,727Year ended March 31, 2008Proportionate interest in net capitalized costs of equity method investments
    
    
    16,892
 Costs incurred in oil property acquisition, exploration and development activities
  Year ended March 31, 2010Property acquisition costsProved
    
    
    -Unproved
    
    
    -Exploration costs
    
    
    -Development costs
    
    
    1Proportionate interest in cost incurred of equity method investments
    
    
    1Year ended March 31, 2009Proportionate interest in costs incurred of equity method investments
    
    
    31Year ended March 31, 2008Proportionate interest in costs incurred of equity method investments
    
    
    269
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NIPPON MINING HOLDINGS, INC.
   Year ended March 31, 2010RevenueSales to third parties
    
    
    26,052Production costs
    
    
    (10,189
    )Depreciation and depletion
    
    
    (2,750
    )Income tax expenses
    
    
    (8,810
    )Proportionate interest in result of oil producing
activities of equity method investments
    
    
    4,303Year ended March 31, 2009Proportionate interest in results of oil producing
activities of equity method investments
    
    
    9,077Year ended March 31, 2008Proportionate interest in results of oil producing
activities of equity method investments
    
    
    8,181
 Oil reserves
       F-86




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##### Table of Contents



NIPPON MINING HOLDINGS, INC.
 Crude oil proved reserves
  Year ended March 31, 2010April 1, 2009
    
    
    24Revisions
    
    
    (0
    )Purchases of minerals in place
    
    
    3Extensions and discoveries
    
    
    0Production
    
    
    (5
    )Proportionate interest in proved reserves of equity method investments
    
    
    22Year ended March 31, 2009Proportionate interest in proved reserves of equity method investments
    
    
    24Year ended March 31, 2008Proportionate interest in proved reserves of equity method investments
    
    
    28
  Proved developed reserves, included above:Beginning of year
    
    
    21End of year
    
    
    19Proved undeveloped reserves, included above:Beginning of year
    
    
    3End of year
    
    
    3
 Standardized measure of discounted future cash flows
   Year ended March 31, 2010Future cash inflows
    
    
    135,407Future production and development costs
    
    
    (64,028
    )Future income tax expenses
    
    
    (44,370
    )Future net cash flows
    
    
    27,00910% annual discount for estimated timing of cash flows
    
    
    (7,326
    )Proportionate interest in standardized measure of discounted
future net cash flows related to proved reserves of equity method
investments
    
    
    19,683Year ended March 31, 2009Proportionate interest in standardized measure of discounted
future net cash flows related to proved reserves of equity method
investments
    
    
    6,189Year ended March 31, 2008Proportionate interest in standardized measure of discounted
future net cash flows related to proved reserves of equity method
investments
    
    
    49,149
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NIPPON MINING HOLDINGS, INC.
   Proportionate interest in standardized measure of discounted future net cash flows
related to proved reserves of equity method investments, as of March 31, 2009
    
    
    6,189Net changes in prices and production costs
    
    
    43,780Sales and transfers of oil produced during the year, net of production costs
    
    
    (15,863
    )Revisions of previous quantity estimates
    
    
    (220
    )Purchase of minerals in place
    
    
    2,584Accretion of discount
    
    
    (1,897
    )Net change in income taxes
    
    
    (14,890
    )Total change in the standardized measure during the year
    
    
    13,494Proportionate interest in standardized measure of discounted future net cash flows
related to proved reserves of equity method investments, as of March 31, 2010
    
    
    19,683
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NIPPON MINING HOLDINGS, INC.
 
 SCHEDULE II
 Valuation and qualifying accounts
 Balance atbeginning of
    
    Charged to
    
    Bad debts
    
    Balance atperiod
    
    expenses
    
    written off
    
    end of periodYear ended March 31, 2010Allowance for doubtful accounts
    
    
    3,086
    
    
    
    330
    
    
    
    (510
    )
    
    
    2,906Year ended March 31, 2009Allowance for doubtful accounts
    
    
    2,059
    
    
    
    1,155
    
    
    
    (128
    )
    
    
    3,086Year ended March 31, 2008Allowance for doubtful accounts
    
    
    2,183
    
    
    
    194
    
    
    
    (318
    )
    
    
    2,059
 Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    Translation
    
    
    Balance at end ofperiod
    
    
    Additions
    
    
    Deductions
    
    
    adjustment
    
    
    periodYear ended March 31, 2010Valuation allowance - Deferred tax assets
    
    
    88,787
    
    
    
    6,357
    
    
    
    (24,161
    )
    
    
    489
    
    
    
    71,472Year ended March 31, 2009Valuation allowance - Deferred tax assets
    
    
    83,407
    
    
    
    23,479
    
    
    
    (10,755
    )
    
    
    (7,344
    )
    
    
    88,787Year ended March 31, 2008Valuation allowance - Deferred tax assets
    
    
    91,241
    
    
    
    3,605
    
    
    
    (10,008
    )
    
    
    (1,431
    )
    
    
    83,407
 F-89




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##### Table of Contents



(DELOITTE LOGO)Deloitte
Auditores y Consultores Limitada
RUT: 80.276.200-3
Av. Providencia 1760
Pisos 6, 7, 8, 9, 13 y 18
Providencia, Santiago
Chile
Fono: (56-2) 729 7000
Fax: (56-2) 374 9177
e-mail: deloittechile@deloitte.com
www.deloitte.cl 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
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MINERA LOS PELAMBRES
 
 
 
 2009
    
    
    2008ThUS$
    
    
    ThUS$ASSETSCURRENT ASSETS:Cash at bank and in hand
    
    
    2,818
    
    
    
    821Time deposits
    
    
    103,518
    
    
    
    221,926Money market funds
    
    
    279,417
    
    
    
    103,114Trade debtors -net
    
    
    220,938Sundry debtors
    
    
    14,521
    
    
    
    7,898Notes receivable
    
    
    390
    
    
    
    231Accounts receivable from related companies
    
    
    569
    
    
    
    1Inventories - net
    
    
    54,073
    
    
    
    85,479Recoverable taxes
    
    
    17,227
    
    
    
    92,503Prepaid expenses
    
    
    18,250
    
    
    
    11,686Deferred taxes
    
    
    869
    
    
    
    59,776Other current assets
    
    
    97
    
    
    
    14Total current assets
    
    
    712,687
    
    
    
    583,449FIXED ASSETS:Land
    
    
    4,969
    
    
    
    4,969Construction and infrastructure
    
    
    1,714,284
    
    
    
    1,557,199Machinery and equipment
    
    
    913,523
    
    
    
    838,187Other fixed assets
    
    
    616,685
    
    
    
    341,181Subtotal
    
    
    3,249,461
    
    
    
    2,741,536Accumulated depreciation
    
    
    (715,309
    )
    
    
    (594,219
    )Total fixed assets - net
    
    
    2,534,152
    
    
    
    2,147,317OTHER ASSETS:Intangibles - net
    
    
    123,434
    
    
    
    123,220Other
    
    
    48,341
    
    
    
    12,057Total other assets
    
    
    171,775
    
    
    
    135,277TOTAL ASSETS
    
    
    3,418,614
    
    
    
    2,866,043
  F-91




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2009
    
    
    2008ThUS$
    
    
    ThUS$LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Bank loans
    
    
    245,090
    
    
    
    225,007Bank loans: short-term portion of long- term debt
    
    
    178,304
    
    
    
    76,826Accounts payable
    
    
    125,210
    
    
    
    115,198Sundry creditors
    
    
    6,568
    
    
    
    1,421Accounts payable to related companies
    
    
    707
    
    
    
    1,322Accruals
    
    
    14,259
    
    
    
    10,810Withholdings
    
    
    28,762
    
    
    
    3,231Income tax payable
    
    
    8,354
    
    
    
    -Advance payments from customers
    
    
    -
    
    
    
    274,168Total current liabilities
    
    
    607,254
    
    
    
    707,983LONG-TERM LIABILITIES:Bank loans
    
    
    404,000
    
    
    
    76,667Accounts payable to related company
    
    
    149
    
    
    
    157Accruals
    
    
    59,517
    
    
    
    15,880Deferred taxes
    
    
    265,422
    
    
    
    239,238Total long-term liabilities
    
    
    729,088
    
    
    
    331,942SHAREHOLDERS EQUITY:Paid-in capital
    
    
    373,820
    
    
    
    373,820Retained earnings:Retained earnings
    
    
    1,452,298
    
    
    
    1,611,443Net income for the year
    
    
    956,154
    
    
    
    1,020,855Interim dividends
    
    
    (700,000
    )
    
    
    (1,180,000
    )Total shareholders equity, net
    
    
    2,082,272
    
    
    
    1,826,118TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    3,418,614
    
    
    
    2,866,043


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MINERA LOS PELAMBRES
 
 
 2009
    
    
    2008
    
    
    2007ThUS$
    
    
    ThUS$
    
    
    ThUS$REVENUES
    
    
    2,024,521
    
    
    
    2,170,255
    
    
    
    2,656,846OPERATING COSTS
    
    
    (668,554
    )
    
    
    (669,540
    )
    
    
    (470,893
    )OPERATING MARGIN
    
    
    1,355,967
    
    
    
    1,500,715
    
    
    
    2,185,953ADMINISTRATIVE AND SELLING EXPENSES
    
    
    (118,534
    )
    
    
    (148,200
    )
    
    
    (92,875
    )OPERATING INCOME
    
    
    1,237,433
    
    
    
    1,352,515
    
    
    
    2,093,078OTHER INCOME (EXPENSES):Other income
    
    
    676
    
    
    
    30
    
    
    
    7,827Financial income
    
    
    1,911
    
    
    
    10,793
    
    
    
    29,897Financial expenses
    
    
    (20,233
    )
    
    
    (11,734
    )
    
    
    (18,102
    )Other expenses
    
    
    (12,125
    )
    
    
    (5,455
    )
    
    
    (2,345
    )Foreign currency exchange differences
    
    
    191
    
    
    
    (58,013
    )
    
    
    30,445Other (expense) income - net
    
    
    (29,580
    )
    
    
    (64,379
    )
    
    
    47,722INCOME BEFORE INCOME TAX
    
    
    1,207,853
    
    
    
    1,288,136
    
    
    
    2,140,800INCOME TAX
    
    
    (251,699
    )
    
    
    (267,281
    )
    
    
    (399,408
    )NET INCOME FOR THE YEAR
    
    
    956,154
    
    
    
    1,020,855
    
    
    
    1,741,392
  F-93




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MINERA LOS PELAMBRES
 
 
 2009
    
    
    2008
    
    
    2007ThUS$
    
    
    ThUS$
    
    
    ThUS$NET CASH PROVIDED BY OPERATING ACTIVITIES:Net income for the year
    
    
    956,154
    
    
    
    1,020,855
    
    
    
    1,741,392Charges (credits) to income not representing cash flows:Depreciation and amortization
    
    
    127,481
    
    
    
    80,838
    
    
    
    78,711Obsolescence accrual
    
    
    1,561
    
    
    
    (1,335
    )
    
    
    6,599Accruals and other long-term
    
    
    1,458
    
    
    
    7,163
    
    
    
    (168
    )Accrued interest
    
    
    728
    
    
    
    1,166
    
    
    
    590Project write offs
    
    
    6
    
    
    
    1,150
    
    
    
    195Loss (gain) on sale of fixed assets
    
    
    (2
    )
    
    
    1
    
    
    
    (7,132
    )Foreign currency exchange differences
    
    
    (191
    )
    
    
    58,013
    
    
    
    (30,445
    )Other
    
    
    (392
    )
    
    
    (553
    )
    
    
    (231
    )(Increase) decrease in assets:Trade debtors - net mark to market
    
    
    (222,364
    )
    
    
    287,263
    
    
    
    30,026Sundry debtors
    
    
    (6,623
    )
    
    
    12,237
    
    
    
    14,194Accounts receivable from related companies
    
    
    (568
    )
    
    
    3Inventories
    
    
    (459
    )
    
    
    (10,894
    )
    
    
    (34,595
    )Refundable taxes
    
    
    85,888
    
    
    
    (80,033
    )
    
    
    (42,198
    )Other assets
    
    
    (12,786
    )
    
    
    (927
    )
    
    
    (678
    )Increase (decrease) in liabilities:Accounts payable
    
    
    (5,249
    )
    
    
    1,186
    
    
    
    (9,600
    )Accounts payable to related companies
    
    
    (1,046
    )
    
    
    92
    
    
    
    (344
    )Accruals
    
    
    (3,274
    )
    
    
    (6,495
    )
    
    
    (582
    )Withholdings
    
    
    25,531
    
    
    
    (40,858
    )
    
    
    6,075Income tax payable
    
    
    103,911
    
    
    
    41,476
    
    
    
    (88,316
    )Advance payments from customers
    
    
    (274,168
    )
    
    
    274,168
    
    
    
    (684
    )Net cash provided by operating activities
    
    
    775,596
    
    
    
    1,644,516
    
    
    
    1,662,809CASH FLOWS FROM INVESTING ACTIVITIES:Additions to fixed assets - net
    
    
    (465,040
    )
    
    
    (445,459
    )
    
    
    (303,379
    )Sale of fixed assets
    
    
    2
    
    
    
    60
    
    
    
    7,301Net cash used in investing activities
    
    
    (465,038
    )
    
    
    (445,399
    )
    
    
    (296,078
    )CASH FLOWS FROM FINANCING ACTIVITIES:Loans obtained
    
    
    1,308,000
    
    
    
    224,000
    
    
    
    -Payment of dividends
    
    
    (700,000
    )
    
    
    (1,180,000
    )
    
    
    (1,606,409
    )Loan repayments
    
    
    (858,666
    )
    
    
    (81,442
    )
    
    
    (81,442
    )Net cash used in financing activities
    
    
    (250,666
    )
    
    
    (1,037,442
    )
    
    
    (1,687,851
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    59,892
    
    
    
    161,675
    
    
    
    (321,120
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    325,861
    
    
    
    164,186
    
    
    
    485,306CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    
    385,753
    
    
    
    325,861
    
    
    
    164,186SUPPLEMENTAL INFORMATION:Decommissioning cost of fixed assets (Note 3)
    
    
    38,649
    
    
    
    -
    
    
    
    -Interest paid
    
    
    18,443
    
    
    
    9,477
    
    
    
    17,039
  F-94




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##### Table of Contents



MINERA LOS PELAMBRES
 
 
 
 1.
    
    INCORPORATION OF THE COMPANYMinera Los Pelambres is a contractual mining enterprise that started operations on June 4,
1996. The corporate purpose is exploring, developing and exploiting its mining properties,
principally for the purpose of producing and selling copper concentrate, and performing all
the business activities associated with the mining industry.2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Basis of presentation- The financial statements as of December 31, 2009, 2008, and 2007
have been prepared in accordance with accounting principles generally accepted in Chile.b. Functional currency- The Company keeps its official accounting records in United States
dollars (hereinafter US$) due to the granting of a special authorization from the Chilean
Internal Revenue Service.Therefore, Chilean peso transactions have been converted into US$ amounts using the observed
foreign currency exchange rate on the date of each transaction. Asset and liability balances
for accounts recorded in local currency have been converted to US$ amounts using the closing
foreign currency exchange rate at each year-end:
 2009
    
    
    2008
    
    
    2007Closing foreign currency exchange rate (Chilean peso/US dollar)
    
    Ch$
    
    
    507.10
    
    
    
    636.45
    
    
    
    496.89Unidad de Fomento (inflation index - linked units of account)
    
    Ch$
    
    
    0.024
    
    
    
    0.030
    
    
    
    0.025
 Foreign currency exchange differences are recognized in the determination of net income
for the year.c. Time deposits- Time deposits and other instruments are stated at original investment
amount plus accrued interest at the close of the year.d. Money Market Funds- Money market funds are investments in funds presented at their market
value and cash surpluses managed by Asset Managers, who manage a portfolio of instruments with
a strategy to achieving a return on such surpluses. The values are stated at their redemption
value and are adjusted to their fair value at year-end, according to Technical Bulletin No76
of the Chilean Institute of Accountants.e. Inventories- In-process and processed mineral inventories are stated at weighted average
cost in conformity with the method of full absorption, that is including indirect
manufacturing overhead and depreciation of fixed assets related to Company production units.
 F-95




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Raw and other materials, as well as supplies and spare parts in the warehouse, are stated at
average purchase cost. At each year end, this item is presented net of obsolescence
provision.The cost of inventories does not exceed their net realizable value.f. Prepaid expenses- Prepaid expenses mainly include the prepaid portion of insurance
policies contracted to cover operating, transportation, civil liability, air and port handling
risks, with premiums including brokerage commissions. It also includes the short term portion
of deferred expenses related to bank financing.g. Fixed assets -Fixed assets are stated at acquisition cost. Depreciation has been
calculated based on production technical units, for assets subject to depreciation in
accordance with the proper technical indicators. For other fixed assets, depreciation is
calculated using the straight-line method over the estimated useful life of the assets.Mining assets are stated at acquisition cost.Prestripping and preparation and development of the mine relates to the accumulated cost
during the projects construction period and/or its capitalizable expansions or optimizations,
and to other geological and mining development costs incurred during the pre-operating stage,
including planning, engineering, support equipment, maintenance, and supply costs, etc.
necessary to dispose of waste and prepare the pit for exploitation.Mining properties and prestripping costs are amortized based on the extraction of proven and
probable ore reserves.h. Intangibles - Intangible assets are mainly pre-operating costs including original
feasibility studies and others aimed at increasing production capacity, as well as costs
associated with management and support units incurred during project development. Costs
involved in obtaining original project financing in the pre-operating phase are also included.
These costs are amortized based on the extraction of proven and provable ore reserves.i. Finance charges- The cost of obtaining financial debt, have been capitalized as deferred
charges in items Prepaid expenses in Other long term assets which are amortized over the life
of the loan.j. Vacations - The annual cost of employee vacations is included in the determination of
income on the accrual basis.k. Income taxes and deferred taxes- The Company calculates its first category income and
specific mining tax provisions based on Net Taxable Income and Operating Taxable Income
respectively, calculating them as provided for in the Chilean Income Tax and Specific Mining
Tax Law.
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The effects of deferred taxes on temporary differences, tax losses and other items that create
differences between the tax and accounting basis of assets and liabilities are recorded
following the standards set by Technical Bulletins N°60 and complements of the Chilean
Institute of Accountants.l. Severance indemnities- The Company has employees whose individual employment contract
stipulates payment of severance indemnities and also the Board of Directors has the authority
to grant severance indemnities to non-union employees. The severance indemnities are
structured based on the years of service provided by the employee and their salary upon
resignation. The severance indemnities are payable upon voluntary or involuntary resignation
by the employee. The Company records the severance indemnity at net present value and as a
long-term liability under the Accruals item.m. Mine closure- The Company records mine closure cost and abandonment of installations at
net present value pursuant to the Companys policies and legal environment obligations with
government offices. Such accruals are recorded in long-term liabilities under the Accruals
item.n. Cash equivalents- For cash flow statement purposes, cash equivalents include time deposits
and readily determinable financial investments maturing within 90 days, including money market
funds and the investments with Asset Managers who manage the short-term portfolio, according
to the Companys defined cash surplus investment policies.o. Revenue -Copper concentrate sales are initially recognized upon shipment using the
provisional price indicated in the sales contract, net of treatment and refining charges. At
year end, provisional revenues are compared to expected final revenues (estimated using the
expected final price of copper as of the date for calculating final prices indicated in the
sales contract, usually 3 to 4 months after shipment). When the expected final revenue is
less than the recorded provisional revenue, the provisional revenue is reduced. Provisional
revenue is never increased if the expected final prices are higher. Also, estimated losses
resulting from the arbitration of disputed invoiced quantities are recorded.p. Reclassifications - For comparative purposes, some items have been reclassified in the
financial statements as of December 31, 2008.
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3.
    
    CHANGE IN ACCOUNTING ESTIMATEBased on a new study of closure costs, in 2009 the Company updated the provision made for that
purpose. This change implied an increase in the provision, which is divided into two concepts
 - Decommissioning of the fixed assets, which generated recognition of an asset of ThUS$38,649,
which is stated in Other Fixed Assets and will be depreciated using the straight line method
over a useful life of 28 years, and the environmental restoration or remediation cost, which
is considered an administrative expense in the period in which it is incurred or accrued and,
as of December 31, 2009, represents a value of ThUS$378.This new mine closure study also considered a change in the discount rate used for appraising
the provision, which dropped from 6.5% to 2.74% (average TIPS rate over the last 12.5 years).
As of December 31, 2009, it represented an effect on financial costs of ThUS$1,158.4.
    
    TIME DEPOSITSThe detail of time deposits is as follows:
 Currency
    
    
    2009
    
    
    2008ThUS$
    
    
    ThUS$Foreign time deposits
    
    US$
    
    
    39,456
    
    
    
    131,833Local time deposits
    
    US$
    
    
    40,003
    
    
    
    81,510Local time deposits
    
    Ch$
    
    
    24,059
    
    
    
    8,583Total time deposits
    
    
    
    
    
    
    103,518
    
    
    
    221,926
 5.
    
    MONEY MARKET FUNDSThe detail of money market funds are as follows:
 Currency
    
    
    2009
    
    
    2008ThUS$
    
    
    ThUS$A.M. Deutsche Foreign Investments (*)
    
    US$
    
    
    100,707
    
    
    
    37,547A.M. Blackrock Foreign Investment (*)
    
    US$
    
    
    100,400
    
    
    
    37,298Money market funds (foreign)
    
    US$

    
    
    63,125
    
    
    
    19,092Money market funds
    
    Ch$
    
    
    15,185
    
    
    
    9,177Total investments in money market funds
    
    
    
    
    
    
    279,417
    
    
    
    103,114
 (*)
    
    Recording this portfolio at fair value at December 31, 2009, resulted in a charge
of a net effect of a loss to ThUS$11 to income (charge of ThUS$3 in 2008).
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6.
    
    TRADE DEBTORS - NETThe balance of trade debtors, segregated by geographical area, are as follows:
 2009
    
    
    2008ThUS$
    
    
    ThUS$Foreign debtorsEurope
    
    
    98,721
    
    
    
    46,543Asia Pacific
    
    
    7,613
    
    
    
    17,148Asia Pacific - related parties (*)
    
    
    94,023
    
    
    
    85,986Latin America
    
    
    
    
    
    
    459North America
    
    
    2,515Mark to market estimate and metal content adjustment
    
    
    (2,819
    )
    
    
    (271,180
    )Final liquidations (**)
    
    
    19,934
    
    
    
    (181,006
    )Total foreign debtors
    
    
    219,987
    
    
    
    (302,050
    )Local debtors
    
    
    951
    
    
    
    27,882Total (***)
    
    
    220,938
    
    
    
    (274,168
    )
 (*)
    
    Invoicing for sale of product to foreign customers either directly or indirectly
related to Company shareholders, Nippon LP Resources B.V. and MM LP Holding B.V.(**)
    
    They correspond to final liquidations at each year end, not yet collected or paid.
As a result of the decrease in the prices of copper and molybdenum, at the 2008 year-end
final sales prices of these products were known and less than the amount already invoiced
at year-end. As such, amounts represent known credits that are to be applied to customer
accounts or refunded accordingly.(***)
    
    As of December 31, 2008, the credit balance is presented as advance payments from
customers within current liabilities.
 7.
    
    INVENTORIESThe detail of inventories is as follows:
 2009
    
    
    2008ThUS$
    
    
    ThUS$Finished products
    
    
    3,475
    
    
    
    8,041Work in progress
    
    
    16,330
    
    
    
    47,259Raw materials
    
    
    43,431
    
    
    
    37,781Provision for obsolescence of materials
    
    
    (9,163
    )
    
    
    (7,602
    )Total
    
    
    54,073
    
    
    
    85,479
 Inventories amounting to  ThUS$30,024 in 2009 (ThUS$30,145 in 2008) representing inventories that are not expected to be used within the next 12
months, are presented under other in other long term assets, as described in Note 2e.
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8.
    
    FIXED ASSETSFixed assets are recorded as outlined in Note 2g. The detail is as follows:
 2009
    
    
    2008ThUS$
    
    
    ThUS$Land
    
    
    4,969
    
    
    
    4,969Construction and infrastructure:Buildings and construction
    
    
    647,784
    
    
    
    690,210Infrastructure
    
    
    1,045,488
    
    
    
    847,050Installations
    
    
    21,012
    
    
    
    19,939Total construction and infrastructure
    
    
    1,714,284
    
    
    
    1,557,199Machinery and equipment:Machinery and equipment
    
    
    815,314
    
    
    
    739,582Furniture and fixtures
    
    
    3,617
    
    
    
    3,617Information technology and communication equipment
    
    
    20,299
    
    
    
    20,299Mobile equipment
    
    
    73,994
    
    
    
    74,390Vehicles
    
    
    299
    
    
    
    299Total machinery and equipment
    
    
    913,523
    
    
    
    838,187Other fixed assets:Works in progress El Mauro dam
    
    
    
    
    
    
    23,982Works in progress Re-powering II
    
    
    427,669
    
    
    
    212,414Projects in progress
    
    
    92,727
    
    
    
    47,158Mining properties
    
    
    12,643
    
    
    
    12,643Prestripping
    
    
    44,824
    
    
    
    44,824Other fixed assets - decomissioning (Note 3)
    
    
    38,649
    
    
    
    -Fixed assets for disposal
    
    
    173
    
    
    
    160Total other fixed assets
    
    
    616,685
    
    
    
    341,181Total fixed assets, gross
    
    
    3,249,461
    
    
    
    2,741,536Accumulated depreciation of construction
and infrastructure
    
    
    (321,419
    )
    
    
    (253,655
    )Accumulated depreciation of machinery and equipment
    
    
    (373,220
    )
    
    
    (323,027
    )Accumulated depreciation of other fixed assests - decomissioning
    
    
    (1,406
    )
    
    
    -Amortization of mining properties and prestripping
    
    
    (19,264
    )
    
    
    (17,537
    )Total accumulated depreciation and amortization
    
    
    (715,309
    )
    
    
    (594,219
    )Total fixed assets  net
    
    
    2,534,152
    
    
    
    2,147,317
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9.
    
    INTANGIBLES
  2009
    
    
    2008ThUS$
    
    
    ThUS$Capitalized interest during start-up stage
    
    
    90,249
    
    
    
    90,249Administrative and management cost capitalized during start-up stage
    
    
    76,644
    
    
    
    76,644Easements, water rights, software, trade marks, patents and other rights
    
    
    17,061
    
    
    
    10,695Total intangibles
    
    
    183,954
    
    
    
    177,588Accumulated amortization
    
    
    (60,520
    )
    
    
    (54,368
    )Total intangibles  net
    
    
    123,434
    
    
    
    123,220
 10.
    
    BANK LOANS
 a. Short-term
   Financial institutions
    
    2009
    
    
    2008ThUS$
    
    
    ThUS$Scotiabank
    
    
    86,021
    
    
    
    50,110Chile
    
    
    70,021
    
    
    
    30,199Estado
    
    
    50,016BBVA
    
    
    25,029HSBC Chile
    
    
    14,003Santander
    
    
    
    
    
    
    105,579Bice
    
    
    
    
    
    
    39,119Total
    
    
    245,090
    
    
    
    225,007
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b. Long-term
       As of December 31, 2009:
 Financial institutions
    
    Interest rate
    
    
    Short-term
    
    
    Long-term%
    
    
    ThUS$
    
    
    ThUS$Citibank and others
    
    
    0.7400
    
    
    
    76,690Club Deal loan
    
    
    2.0844
    
    
    
    101,614
    
    
    
    404,000Total
    
    
    
    
    
    
    178,304
    
    
    
    404,000
 As of December 31, 2008:
 Financial institutions
    
    Interest rate
    
    
    Short-term
    
    
    Long-term%
    
    
    ThUS$
    
    
    ThUS$Citibank and others
    
    
    2.4900
    
    
    
    76,826
    
    
    
    76,667Total
    
    
    
    
    
    
    76,826
    
    
    
    76,667
 F-102




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11.
    
    ACCOUNTS PAYABLE
  2009
    
    
    2008ThUS$
    
    
    ThUS$Invoices payable
    
    
    88,271
    
    
    
    95,745Withholdings from contractors
    
    
    16,656
    
    
    
    8,233Insurance policies payable
    
    
    20,283
    
    
    
    11,220Total
    
    
    125,210
    
    
    
    115,198
 12.
    
    ACCRUALS
  2009
    
    
    2008ThUS$
    
    
    ThUS$Short-term:Employee benefits
    
    
    14,148
    
    
    
    10,608Other
    
    
    111
    
    
    
    202Total
    
    
    14,259
    
    
    
    10,810
 2009
    
    
    2008ThUS$
    
    
    ThUS$Long-term:Severance indemnity
    
    
    15,709
    
    
    
    12,257Mine closure costs
    
    
    43,808
    
    
    
    3,623Total
    
    
    59,517
    
    
    
    15,880
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13.
    
    INCOME AND DEFERRED TAXES
 a. Recoverable taxes include the following:
 2009
    
    
    2008ThUS$
    
    
    ThUS$Current assets:Specific tax on petroleum products
    
    
    597
    
    
    
    375Value added tax
    
    
    13,299
    
    
    
    26,346Monthly Provisional Payments and income tax credit, net
    
    
    
    
    
    
    65,626Other withholding taxes recoverable
    
    
    3,331
    
    
    
    156Total short-term
    
    
    17,227
    
    
    
    92,503Other assets (long term):Additional tax for advisory services
    
    
    6,456
    
    
    
    4,919Total long-term
    
    
    6,456
    
    
    
    4,919
  b. Income tax
   F-104




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2009
    
    
    2008ThUS$
    
    
    ThUS$Income tax provision
    
    
    (132,944
    )
    
    
    (169,275
    )Specific mining tax provision
    
    
    (33,512
    )
    
    
    (56,604
    )Monthly provisional payments
    
    
    155,227
    
    
    
    223,817Technical consulting services additional tax
    
    
    512
    
    
    
    381Refundable training expenses
    
    
    207
    
    
    
    157Credits from donations
    
    
    2,109
    
    
    
    1,486Credits from purchases of fixed assets
    
    
    47
    
    
    
    38Income and specific mining tax payable
    
    
    (8,354
    )
 c. Deferred taxes
  2009
    
    2008Asset
    
    Liability
    
    Asset
    
    LiabilityShort-
    
    Long-
    
    Short-
    
    Long-
    
    Short-
    
    Long-
    
    Short-
    
    Long-term
    
    term
    
    term
    
    term
    
    term
    
    term
    
    term
    
    termThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$Trade debtors
    
    
    576
    
    
    
    -
    
    
    
    908
    
    
    
    -
    
    
    
    48,808
    
    
    
    -
    
    
    
    -
    
    
    
    -Inventories
    
    
    1,601
    
    
    
    -
    
    
    
    2,134
    
    
    
    -
    
    
    
    1,296
    
    
    
    -
    
    
    
    2,431
    
    
    
    -Fixed assets - depreciation
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    225,093
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    201,507Intangibles
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    32,410
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    32,372Other
    
    
    -
    
    
    
    -
    
    
    
    210
    
    
    
    595
    
    
    
    -
    
    
    
    -
    
    
    
    58
    
    
    
    59Accruals
    
    
    1,739
    
    
    
    3,751
    
    
    
    -
    
    
    
    -
    
    
    
    775
    
    
    
    2,673
    
    
    
    -
    
    
    
    -Sub-total (*)
    
    
    3,916
    
    
    
    3,751
    
    
    
    3,252
    
    
    
    258,098
    
    
    
    50,879
    
    
    
    2,673
    
    
    
    2,489
    
    
    
    233,938Specific mining tax (**)
    
    
    879
    
    
    
    2,372
    
    
    
    674
    
    
    
    13,447
    
    
    
    11,957
    
    
    
    484
    
    
    
    571
    
    
    
    8,457Total deferred taxes
    
    
    4,795
    
    
    
    6,123
    
    
    
    3,926
    
    
    
    271,545
    
    
    
    62,836
    
    
    
    3,157
    
    
    
    3,060
    
    
    
    242,395
   (*)
    
    This represents the deferred taxes on the temporary differences calculated using the first category income tax.(**)
    
    This represents the additional deferred taxes an the temporary differences calculated using the specific mining tax rate of 4%.
 F-105




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2009
    
    
    2008
    
    
    2007ThUS$
    
    
    ThUS$
    
    
    ThUS$Current tax expense:Income tax provsion
    
    
    (132,944
    )
    
    
    (169,275
    )
    
    
    (337,217
    )(Deficit) surplus of prior year income tax provision
    
    
    (371
    )
    
    
    38
    
    
    
    65Provision for specific mining tax
    
    
    (33,512
    )
    
    
    (56,604
    )
    
    
    (39,730
    )Surplus (deficit) of prior year specific mining tax
    
    
    219
    
    
    
    36
    
    
    
    (131
    )Deferred taxes:Changes in deferred taxes during the year
    
    
    (70,808
    )
    
    
    (45,833
    )
    
    
    (21,730
    )Deferred taxes for specific mining tax
    
    
    (14,283
    )
    
    
    4,357
    
    
    
    (665
    )Income tax expense
    
    
    (251,699
    )
    
    
    (267,281
    )
    
    
    (399,408
    )
 14.
    
    SHAREHOLDERS EQUITY, NET
 a.
 Paid-in
    
    
    RetainedItems
    
    capital
    
    
    earnings
    
    
    TotalThUS$
    
    
    ThUS$
    
    
    ThUS$Balance at January 1, 2007
    
    
    373,820
    
    
    
    1,476,460
    
    
    
    1,850,280Net income for the year
    
    
    -
    
    
    
    1,741,392
    
    
    
    1,741,392Interim dividends
    
    
    -
    
    
    
    (1,606,409
    )
    
    
    (1,606,409
    )Balance at December 31, 2007
    
    
    373,820
    
    
    
    1,611,443
    
    
    
    1,985,263Balance at January 1, 2008
    
    
    373,820
    
    
    
    1,611,443
    
    
    
    1,985,263Net income for the year
    
    
    -
    
    
    
    1,020,855
    
    
    
    1,020,855Interim dividends
    
    
    -
    
    
    
    (1,180,000
    )
    
    
    (1,180,000
    )Balance at December 31, 2008
    
    
    373,820
    
    
    
    1,452,298
    
    
    
    1,826,118Balance at January 1, 2009
    
    
    373,820
    
    
    
    1,452,298
    
    
    
    1,826,118Net income for the year
    
    
    -
    
    
    
    956,154
    
    
    
    956,154Interim dividends
    
    
    -
    
    
    
    (700,000
    )
    
    
    (700,000
    )Balance at December 31, 2009
    
    
    373,820
    
    
    
    1,708,452
    
    
    
    2,082,272
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b
 Number of
    
    
    Subscribed andShareholders
    
    shares
    
    
    paid-in capitalThUS$
    
    
    %LP Investment Co. Ltd.
    
    
    191,379,489
    
    
    
    191,380
    
    
    
    51.20Nippon LP Resources BV
    
    
    93,454,920
    
    
    
    93,455
    
    
    
    25.00MM LP Holding BV
    
    
    56,072,952
    
    
    
    56,073
    
    
    
    15.00Antofagasta Minerals S.A.
    
    
    32,912,319
    
    
    
    32,912
    
    
    
    8.80Total
    
    
    373,819,680
    
    
    
    373,820
    
    
    
    100.00
 c.
    
    The Board of Directors approved the interim dividend paid to the Companys
shareholders in 2009, at the ordinary meetings N° 134, dated on November 26, 2009, for
ThUS$700,000.d.
    
    The Board of Directors approved the interim dividend paid to the Companys
shareholders in 2008, at the ordinary meetings N° 124, of March 26, 2008, N°125, of on
May 16, 2008, extraordinary meeting of July 30, 2008 and No126, of August 28, 2008 for
ThUS$300,000, ThUS$300,000, ThUS$420,000 and ThUS$160,000, respectively.
 15.
    
    BALANCES AND TRANSACTIONS WITH RELATED PARTIES
  As of December 31, 2009:
 Transaction
    
    
    

    Effect on resultsRelated party
    
    Transaction description
    
    amount
    
    
    charge (credit)
    
    
    Asset
    
    
    LiabilityThUS$
    
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Antofagasta Minerals S.A.
    
    Administrative services received
    
    
    2,191
    
    
    
    1,841
    
    
    
    -
    
    
    
    587Technical support received
    
    
    1,457
    
    
    
    1,225
    
    
    
    -
    
    
    
    -Recovery of expenses
    
    
    396
    
    
    
    333
    
    
    
    -
    
    
    
    112Rental of offices in Apoquindo
    
    
    1,005
    
    
    
    555
    
    
    
    -
    
    
    
    -Water rights
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    8Expense collection
    
    
    600
    
    
    
    (594
    )
    
    
    563
    
    
    
    -Minera El Tesoro
    
    Expense collection
    
    
    168
    
    
    
    (141
    )
    
    
    -
    
    
    
    -Minera Esperanza
    
    Expense collection
    
    
    34
    
    
    
    (28
    )
    
    
    3
    
    
    
    -Other related
    
    Services and others
    
    
    3,063
    
    
    
    3,047
    
    
    
    3
    
    
    
    -LP Investment Co. Ltd.
    
    20% withholding on disallowed exp.
    
    
    809
    
    
    
    809
    
    
    
    -
    
    
    
    -Nippon LP Resources BV
    
    20% withholding on disallowed exp.
    
    
    395
    
    
    
    395
    
    
    
    -
    
    
    
    -MM LP Holding BV
    
    20% withholding on disallowed exp.
    
    
    237
    
    
    
    237
    
    
    
    -
    
    
    
    -Total short-term
    
    
    
    
    
    
    
    
    
    
    
    
    569
    
    
    
    707Antofagasta Minerals S.A.
    
    Water rights
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    149Total long-term
    
    
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    149
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As of December 31, 2008:
 Transaction
    
    
    Effect on incomeRelated party
    
    Transaction description
    
    amount
    
    
    charge (credit)
    
    
    Asset
    
    
    LiabilityThUS$
    
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Antofagasta Minerals S.A.
    
    Administrative services received
    
    
    870
    
    
    
    731
    
    
    
    -
    
    
    
    709Technical support received
    
    
    1,595
    
    
    
    1,340
    
    
    
    -
    
    
    
    300Recovery of expenses
    
    
    694
    
    
    
    583
    
    
    
    -
    
    
    
    190Rental of offices in Apoquindo
    
    
    65
    
    
    
    55
    
    
    
    -
    
    
    
    65Water rights
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    8Expense collection
    
    
    591
    
    
    
    (573
    )
    
    
    -
    
    
    
    -Minera Los Pelambres Foundation
    
    Donation
    
    
    3,384
    
    
    
    3,384
    
    
    
    -
    
    
    
    -Minera Michilla S.A.
    
    Rental of offices in Santiago
    
    
    201
    
    
    
    201
    
    
    
    -
    
    
    
    -Minera El Tesoro
    
    Expenses collection
    
    
    200
    
    
    
    (168
    )
    
    
    -
    
    
    
    -Purchase of materials
    
    
    89
    
    
    
    75
    
    
    
    -
    
    
    
    -Minera Esperanza
    
    Expenses collection
    
    
    12
    
    
    
    (10
    )
    
    
    -
    
    
    
    -Serv. de Trans. Integrado Ltda.
    
    Services of transport
    
    
    50
    
    
    
    42
    
    
    
    -
    
    
    
    50Other related companies
    
    Services and others
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    -LP Investment Co. Ltd.
    
    20% withholding on disallowed expense
    
    
    250
    
    
    
    250
    
    
    
    -
    
    
    
    -Nippon LP Resources BV
    
    20% withholding on disallowed expense
    
    
    122
    
    
    
    122
    
    
    
    -
    
    
    
    -MM LP Holding BV
    
    20% withholding on disallowed expense
    
    
    73
    
    
    
    73
    
    
    
    -
    
    
    
    -Total short-term
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,322Antofagasta Minerals S.A.
    
    Water rights
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    157Total long-term
    
    
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    157
 As of December 31, 2007:
 Transaction
    
    
    Effect on incomeRelated party
    
    Transaction description
    
    amount
    
    
    charge (credit)
    
    
    Asset
    
    
    LiabilityThUS$
    
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Antofagasta Minerals S.A.
    
    Administrative services received
    
    
    1,688
    
    
    
    1,418
    
    
    
    -
    
    
    
    813Technical support received
    
    
    1,576
    
    
    
    1,324
    
    
    
    -
    
    
    
    145Recovery of expenses
    
    
    1,582
    
    
    
    1,317
    
    
    
    -
    
    
    
    233Expense collection
    
    
    90
    
    
    
    (46
    )
    
    
    4
    
    
    
    -Minera Los Pelambres Foundation
    
    Donation
    
    
    1,498
    
    
    
    1,498
    
    
    
    -
    
    
    
    -Minera Michilla S.A.
    
    Rental of offices in Santiago
    
    
    212
    
    
    
    212
    
    
    
    -
    
    
    
    19Expenses collection
    
    
    17
    
    
    
    (14
    )
    
    
    -
    
    
    
    -Minera El Tesoro
    
    Expenses collection
    
    
    267
    
    
    
    (171
    )
    
    
    -
    
    
    
    -Purchase of materials
    
    
    20
    
    
    
    -
    
    
    
    -
    
    
    
    20Other related
    
    Services and others
    
    
    2
    
    
    
    2
    
    
    
    -
    
    
    
    -LP Investment Co. Ltd.
    
    20% withholding on disallowed expenses
    
    
    61
    
    
    
    61
    
    
    
    -
    
    
    
    -Nippon LP Resources BV
    
    20% withholding on disallowed expenses
    
    
    30
    
    
    
    30
    
    
    
    -
    
    
    
    -MM LP Holding BV
    
    20% withholding on disallowed expenses
    
    
    18
    
    
    
    18
    
    
    
    -
    
    
    
    -Total short-term
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    1,230Antofagasta Minerals S.A.
    
    Water rights
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    165Total long-term
    
    
    
    
    
    
    
    
    
    
    
    
    -
    
    
    
    165
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16.
    
    OTHER INCOME AND EXPENSESThe detail of other income and expenses is as follows:
 2009
    
    
    2008
    
    
    2007ThUS$
    
    
    ThUS$
    
    
    ThUS$Other income:Gain on sale of fixed asset
    
    
    2
    
    
    
    -
    
    
    
    7,132Other income
    
    
    674
    
    
    
    30
    
    
    
    695Total
    
    
    676
    
    
    
    30
    
    
    
    7,827Other expenses:Provision donations
    
    
    6,541
    
    
    
    -
    
    
    
    -Contribution to Minera Los Pelambres Foundation
    
    
    3,047
    
    
    
    3,384
    
    
    
    1,498Write-off of credit of donations
    
    
    363
    
    
    
    -
    
    
    
    -Project write-offs
    
    
    6
    
    
    
    1,150
    
    
    
    195Withholdings write-off
    
    
    1,441
    
    
    
    445Provision for write off-of housing loans
    
    
    139
    
    
    
    131
    
    
    
    128Loss on sale of fixed assets
    
    
    -
    
    
    
    1
    
    
    
    -Other expenses
    
    
    588
    
    
    
    344
    
    
    
    524Total
    
    
    12,125
    
    
    
    5,455
    
    
    
    2,345
 17.
    
    CONTINGENCIES, GUARANTEES AND ENCUMBRANCESI.  Lawsuits:The Companys Management is aware of legal disputes in which Minera Los Pelambres is either
the main or subsidiary defendant, or the plaintiff, which to the best of its knowledge do not
significantly affect these financial statements. The detail of the most significant lawsuits
is as follows:
 Matter
    
    :
    
    New Works Lawsuit at Tranque El Mauro.Parties
    
    :
    
    Flores Tapia, Cristián Andrés and others versus Minera Los Pelambres.Case records
    
    :
    
    N° 7.957-2008, Los Vilos First Instance and Guarantee Court.Quantum
    
    :
    
    Quantum has not been determined. Therefore, it is impossible to indicate a potential loss amount.Status
    
    :
    
    On December 4, 2008, the court ruled a temporary works suspension at Tranque El
Mauro. This has not had a major effect, as on the said date works were already
completed.During this trial, response and evidence summons, position dismissal, and
the court inspection have already been carried out. Currently, two expert
reports are outstanding.
 F-109




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##### Table of Contents



Matter
    
    :
    
    Ruin and New Works Lawsuit at Tranque El Mauro.Parties
    
    :
    
    Defensa de Comunidad Pueblo de Caimanes (Caimanes Community Defense) versus Minera Los Pelambres.Case records
    
    :
    
    N° 7.981-2008, Los Vilos First Instance and Guarantee Court.Quantum
    
    :
    
    No quantum has been determined. Therefore, it is impossible to indicate a potential loss amount.Status
    
    :
    
    The court accepted an incidental plea for invalidation and dismissed the new works
lawsuit as it should not be processed together with a ruin works lawsuit. Ruin works
lawsuit is still being processed, and the court inspection indicated by law has already
taken place. Currently, an experts report is pending, ordered by the court. In
connection with this, on November 17, 2009, the court accepted a legal impediment
requested by Minera Los Pelambres against the expert appointed by the court. The
plaintiffs appealed against the said decision, but their appeal was not accepted. The
plaintiffs also appealed against the said appeal rejection. This appeal is pending for
decision at La Serena Court of Appeal.Matter
    
    :
    
    Precautionary Measure and Ordinary Conciliation Annulment Procedure.Parties
    
    :
    
    Gallardo Rojas, Alfredo and other versus Ugarte Elgueta, Víctor and others.Case records
    
    :
    
    N° 28.409-2008, 8° Santiago Civil Court.Quantum
    
    :
    
    The action for annulment has no quantum. With regards to losses, defendants are
jointly and severally sued (118 in total) for the amount of $332,285,000 corresponding to
each one of the three.Status
    
    :
    
    On March 25, 2009, the Company submitted an incidental plea due to irregularities in
the form the action suit was set forth. To this date, said incidental plea has not been
resolved. Also, the action suit and precautionary measure have not been notified to
every defendant. In addition, Agrícola, Ganadera y Forestal Tipay, Mr. Victor Ugarte,
Ms. Stella Bañados, as well as individuals represented by Mr. Fernando Dougnac have
submitted incidental pleas. On September 29, 2009, the Court lifted the precautionary
measure initially ruled against the rest of the plaintiffs. Appeals submitted against
said decision are still outstanding.
 II.  ENCUMBRANCES:The Companys assets are not subject to any mortgages, encumbrances or prohibitions.III.  OTHER GUARANTEES
 Guarantees Provided:
 
    
    The Company has issued performance bonds through banks for ThUS$12,655 on
behalf of the Water Board of the Chilean Ministry of Public Works as collateral for
any possible costs incurred in a possible abandonment of the construction and
operation of the Los Quillayes tailings dam. Such bonds are in force until July 4,
2010.
 F-110




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
    
    The Company has issued performance bonds through banks for ThUS$4,877 on
behalf of the Water Board of the Chilean Ministry of Public Works as collateral for
any possible costs incurred in a possible abandonment of the construction and
operation of the El Mauro tailings dam. Such bonds are in force until October 26,
2010.
    
    The Company provided a bank guarantee in favor of the Chilean Department
of Public Works, Water Section, in order to guarantee the modification or demolition
cost of the natural water project, a tunnel to divert Cuncumen river, for UF71,030,
equivalent to a total of ThUS$2,933. Such bonds are in force until March 31, 2011.Guarantees Received:
    
    To date, performance bonds and letters of credits, issued by foreign or
local banks in favor of the Company, have been provided by contractors and suppliers
for an approximate amount for ThUS$70,464 to guarantee compliance with contracts and
in the case of equipment, its quality and performance.
 IV.  RESTRICTIONS ON OPERATIONS OR LIMITSAs a result of obligations undertaken with financial institutions indicated in Note 10b, the
Company must comply with certain conditions regarding financial indebtedness, EBITDA ratio
regarding financial expenses, maintaining a minimum equity level, distributing dividends and
hedging operations, in addition to other restrictions common to this type of operations.V.  MINERAL SALES AGREEMENTSThe mineral sale agreements correspond to the contracts entered into with domestic and foreign
customers, valued at the selling prices in force at period-end
(London Metal Exchange price). Such prices are agreed on FOB
or CIF terms, as appropriate, and are negotiated annually.The sale agreements of mineral in accordance with the agreed contracts amount to:
 Years
    
    ThUS$2010
    
    
    1,400,0002011
    
    
    1,100,000
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18.
    
    SUMMARY OF PRINCIPAL DIFFERENCES BETWEEN CHILEAN GAAP AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (US GAAP)These financial statements have been prepared in accordance with Chilean generally accepted
accounting principles (Chilean GAAP). Material variations in the accounting principles,
practices and methods used in preparing these financial statements from principles, practices
and methods accepted by US GAAP are described and quantified below.The impact of US GAAP on the income statements is as follows:
 2009
    
    
    2008
    
    
    2007ThUS$
    
    
    ThUS$
    
    
    ThUS$Net income under Chilean GAAP
    
    
    956,154
    
    
    
    1,020,855
    
    
    
    1,741,392Provisional Pricing (i)
    
    
    56,945
    
    
    
    1,755
    
    
    
    (4,943
    )Remeasurement of amortization of debt issuance costs (ii)
    
    
    493
    
    
    
    (313
    )
    
    
    3Employee benefit adjustment (iii)
    
    
    (2,087
    )
    
    
    (992
    )
    
    
    750Capitalization of expenses (iv)
    
    
    2,186
    
    
    
    3,024
    
    
    
    4,534Remeasurement of easements and water rights amortization (v)
    
    
    305
    
    
    
    99
    
    
    
    85Remeasurement of amortization of interest capitalized prior to start-up (vi)
    
    
    (301
    )
    
    
    768
    
    
    
    703Capitalized interest-subsequent to start-up (vi)
    
    
    15,064
    
    
    
    9,955
    
    
    
    16,578Depreciation of interest capitalized (vi)
    
    
    (2,267
    )
    
    
    (1,076
    )
    
    
    (854
    )Maintenance provisions (vii)
    
    
    
    
    
    
    
    
    
    
    (8,886
    )Subtotal
    
    
    1,026,492
    
    
    
    1,034,075
    
    
    
    1,749,362Tax effect of reconciling items (viii)
    
    
    (14,770
    )
    
    
    (2,776
    )
    
    
    (1,360
    )Net income attributable to common shareholders under US GAAP1,011,722
    
    
    
    1,031,299
    
    
    
    1,748,002
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2009
    
    
    2008ThUS$
    
    
    ThUS$ASSETS:Total assets under Chilean GAAP
    
    
    3,418,614
    
    
    
    2,866,043Provisional Pricing (i)
    
    
    61,405
    
    
    
    4,460Reclassification of debt issuance costs (ii)
    
    
    (4,736
    )
    
    
    (690
    )Capitalization of expenses (iv)
    
    
    (56,252
    )
    
    
    (58,438
    )Remeasurement of easements and water rights amortization (v)
    
    
    991
    
    
    
    686Capitalized interest-start-up costs (vi)
    
    
    3,496
    
    
    
    3,797Capitalized interest-subsequent to start-up (vi)
    
    
    73,667
    
    
    
    58,603Remeasurement of amortization of interest capitalized prior to start-up(vi)
    
    
    (6,191
    )
    
    
    (3,924
    )Reclassification of mine closure cost (ix)
    
    
    -
    
    
    
    6,983Total assets under US GAAP
    
    
    3,490,994
    
    
    
    2,877,520LIABILITIES:Total liabilities under Chilean GAAP
    
    
    1,336,342
    
    
    
    1,039,925-
    
    
    
    -Deferred debt issuance costs (ii)
    
    
    250
    
    
    
    743Employee benefit adjustment (iii)
    
    
    1,085
    
    
    
    (1,002
    )Deferred tax adjustment (vii)
    
    
    15,913
    
    
    
    1,143Reclassification of debt issuance costs (ii)
    
    
    (4,736
    )
    
    
    (690
    )Reclassification of mine closure cost (ix)
    
    
    -
    
    
    
    6,983Total liabilities under US GAAP
    
    
    1,348,854
    
    
    
    1,047,102SHAREOLDERS EQUITY UNDER CHILEAN GAAP:
    
    
    2,082,272
    
    
    
    1,826,118Provisional Pricing (i)
    
    
    61,405
    
    
    
    4,460Deferred debt issuance costs (ii)
    
    
    (250
    )
    
    
    (743
    )Employee benefit adjustment (iii)
    
    
    (1,085
    )
    
    
    1,002Capitalization of expenses (iv)
    
    
    (56,252
    )
    
    
    (58,438
    )Easements and water rights amortization (v)
    
    
    991
    
    
    
    686Amortization of interest capitalized (vi)
    
    
    3,496
    
    
    
    3,797Capitalized interest-subsequent to start-up (vi)
    
    
    67,476
    
    
    
    54,679Deferred tax adjustment (viii)
    
    
    (15,913
    )
    
    
    (1,143
    )Shareholders equity under US GAAP
    
    
    2,142,140
    
    
    
    1,830,418Total liabilities and shareholders equity under US GAAP
    
    
    3,490,994
    
    
    
    2,877,520
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Explanation of adjustments and GAAP differences
 (i)
    
    Sale of Copper Concentrates -The Company sells copper concentrates to smelters and
refiners under a sales contract. The sales contract requires the buyer to make
payment of a provisional price based on the cash settlement quotation for official London
Metal Exchange Copper Grade A on shipment date, less treatment and refining charges. The
 sales contract also provides for a price adjustment based on the cash settlement
quotation for official London Metal Exchange Copper Grade A within a specified number of
days from shipment date (normally, between 90 and 120 days).The Company recognizes revenue from sale of copper concentrates under Chilean GAAP as
described in Note 2.o. Under US GAAP, revenue equal to the provisional price is
recognized when title and risk of loss passes to the buyer, usually upon shipment of
copper concentrates. In addition, the Company believes that the provisional price
constitutes a price that is fixed or determinable because, while not fixed on the
shipment date as it is subject to future adjustment, is considered determinable based on
the provisional price plus the fair value of the price adjustment. Furthermore, the
Companys right to receive or obligation to pay the price adjustment under the spot
sales contract meets the definition of a derivative under FASB Accounting Standards
Codification (ASC) Topic 815, Derivatives and Hedging. Thus, under US GAAP, the fair
value of the price adjustment is recorded upon shipment of the copper concentrates and
re-measured at fair value at each balance sheet with the changes in fair value included
in determining net income.The adjustment to net income and shareholders equity under Chilean GAAP represents the
difference between the mark to market adjustment of the outstanding price adjustments
under Chilean GAAP as described in Note 2.o and the fair value of the outstanding price
adjustment at both the beginning and the end of the year.(ii)
    
    Debt issuance costs- The Company paid up-front commissions to a third party in
connection with services received in arranging for the bank loan (see Note 10). The
Company accounts for debt issue costs as deferred charges under Chilean GAAP and
amortized it over the life of the loan using the straight line method. Under US GAAP,
debt issue cost is recorded as an asset and amortized by the interest method over the
life of the loan to which they related.(iii)
    
    Employee benefit adjustment- As describe in Note 2 (l) for Chilean GAAP purposes, the Company provide for
severance indemnities when rights to such benefits have been formally granted to
employees.  Those obligations are based on the present value of the liability
determined at end of each year based on the current salary and average service life
of each employee.  Such present value is calculated using a real discount rate of
6.5% for the year ended December 31, 2009 and 2008.  The real annual discount
rate does not include a projection of inflation and, accordingly, future salary
increases are also expected to approximate the increase in inflation over a long-term period.  For US GAAP purposes, the benefit obligation associated with the
severance indemnities describe above are determined based on actuarial
calculation.  The difference in accounting for staff severance indemnities benefits
between Chilean and US GAAP is included in the reconciliation to US GAAP.
 F-114




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(iv)
    
    Expenses Incurred Prior to the Start of Commercial Operations The Company under
Chilean GAAP capitalized certain general and administrative costs (such as salaries)
incurred prior to the start of its commercial operations amounting to ThUS$76,644 as
intangible assets (see Note 9) and amortized using the straight-line method over the
life of specified mines. Under US GAAP, FASB Accounting Standards Codification (ASC)
Subtopic 720-15, Start-Up costs, such general and administrative costs are expensed as
incurred.The adjustment to Chilean GAAP net income represents the reversal of the amortization of
the intangible asset while the adjustment to Chilean GAAP shareholders equity
represents the carrying amount of the intangible assets under Chilean GAAP.(v)
    
    Easements and Water Rights -The Company paid third parties compensation for land easements and water rights.  The Company
recorded such payments as intangible assets under Chilean GAAP (see Note 9) and is required to
amortize them over the life of mine, the benefit most from such payments as Chilean GAAP has no
concept similar to in definitive lives intangibles under USGAAP.For US GAAP purposes, these intangible assets have indefinite
lives and thus is not
 amortized but subject to annual impairment reviews.(vi)
    
    Capitalized Interest -The Company had interest on bank loans it incurred prior to
the start of its commercial operations in 2000 amounting to ThUS$90,249. Under Chilean
GAAP, the Company capitalized the foregoing interest as an intangible asset (see Note 9)
and amortized such intangible asset over the life of the mine. Subsequent to the start
of its commercial operations, the Company ceased capitalizing any interest expense
incurred on loans.Under US GAAP, FASB Accounting Standards Codification (ASC) Subtopic 835-20,
Capitalization of interest, requires capitalization of interest incurred associated with
assets that are constructed or otherwise produced for an enterprises own use (including
assets constructed or produced for the enterprise by others for which deposits or
progress payments have been made). The amount of interest cost to be capitalized is the
portion of the interest cost incurred during the assets acquisition periods that
theoretically could have been avoided if expenditures for the assets had not been made.
The amount capitalized is determined by applying an interest rate (the capitalization
rate) to the average amount of accumulated expenditures for the asset during the
period. The capitalization rates used is based on the rates applicable to borrowings
outstanding during the period. In order to determine the U.S. GAAP income, interest
capitalized as an intangible asset was reclassified to qualifying assets under
construction and amortized according to the related the assets useful life.(vii)
    
    Maintenance provisions -Under U.S. GAAP maintenance is expensed as incurred.
Until December 31, 2007 the Company recorded a maintenance provision for the maintenance
of plan and equipment scheduled for the following year.(viii)
    
    Deferred tax adjustment- Relates to the deferred tax effect resulting from the change
in the financial basis of the assets and liabilities as a result of these U.S. GAAP
 F-115




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adjustments. Other than the deferred tax impact of the U.S. GAAP adjustments, there are
no material differences for accounting for income taxes resulting from the application of
U.S. GAAP.(ix)
    
    Asset Retirement Obligation - Mine Closure Costs -The Company has a legal
obligation (pursuant to laws of the Republic of Chile) and constructive obligations
related to the decommissioning of the mine and surrounding areas. The Companys
accounting for the foregoing asset retirement obligation is described in Note 2.m. The
discount rate in determining the present value of the obligation is based on the
Company  ́s risk free rate which approximates the yield on 20 year Chilean government
bonds.
Under US GAAP, FASB Accounting Standards Codification (ASC) Subtopic 410-20, Asset
Retirement Obligations (ARO), requires the Company to classify the asset retirement cost
as part of the carrying amount of the associated long-lived asset. Further, the fair
value of the asset retirement obligation considers a market risk premium to reflect what
a third-party might require to assume the ARO. The impact of the market risk premium on
the fair value of the ARO is not material.(x)
    
    Inventory obsolescence provision - Chilean GAAP permits the use of an inventory provisions to state inventory at the lower
of cost or market.  In addition, Chilean GAAP permits the reversal of an inventory
provision when the circumstances that previously require the inventory provision no
longer exits such as when there is clear evidence of an increase in net realizable
value.  For US GAAP purposes, ASC 330-10-35-14 requires the Company to adjust
inventory directly for obsolescence, thus creating a new cost basis for the inventory.
A difference in Chilean GAAP and US GAAP net income and shareholders equity
would arise when an inventory provision related to an unsold inventory item that was
recognized in one year and reversed in subsequent year or year as permitted under
Chilean GAAP.  The Company has not reversed any previously set-up inventory
provision in the year or years subsequent to the year the inventory provision on any
unsold inventory item were initially set-up.  Accordingly, there is no difference in net
income and shareholders equity under Chilean GAAP and US GAAP for all periods
presented.(xi)
    
    Guarantees -The Company, as more fully discussed in Note 17, provide several
guarantees wherein it is contingently required to make payments to the guarantee party
based on another entitys failure to perform under an obligating agreement. The Company
provided those guarantees pursuant to (see Note 17) and did not receive any compensation.
Under US GAAP, FIN 45, ASC 460-10-30 requires that the Company record the fair value of
the guarantees provided. There is no similar authoritative literature under Chilean
GAAP. However, the Company believes that the fair value of the guarantees is not
material to the Companys financial statements.(xii)
    
    Statement of Comprehensive Income -U.S.GAAP requires the completion and inclusion
of a statement of Comprehensive Income in accordance with ASC 220. This statement was
not included herein as the Company did not have material comprehensive income, which was
materially consistent with net income.(xiii)
    
    Reconciliation of Statement of Cash Flows -U.S.GAAP requires the completion and
inclusion of a reconciliation of the statement of Cash Flows under Chile GAAP. This
reconciliation was not included herein as the Company did not have material cash flow
differences under Chile GAAP as compared to U.S. GAAP.
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19.
    
    SUBSEQUENT EVENTSOn January 25, 2010, the Company signed a financing contract for ThUS$245,000, whose funds
were received on March 29, 2010. This credit, together with the ThUS$505,000 commercial
credit indicated in Note 10b, form the financing for the comprehensive development project
final stage. This new credit has a 7-year term and is payable in 14 six-monthly installments.On June 24, 2010 the Company paid a dividend for ThUS$500,000
charged to retained earnings.Between January 1 and the date of issuance of these financial statements (July 7, 2010), no
other significant events have taken place that could materially affect them.
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EXHIBIT INDEX
 Exhibit Number
    
    DescriptionExhibit 1.1
    
    Articles of Incorporation of JX Holdings, Inc.Exhibit 1.2
    
    Regulations of the Board of Directors of JX Holdings, Inc.Exhibit 1.3
    
    Share Handling Regulations of JX Holdings, Inc.Exhibit 8.1
    
    List of subsidiaries of Nippon Oil
CorporationExhibit 8.2
    
    List of subsidiaries of Nippon
Mining Holdings, Inc.Exhibit 12.1
    
    Certifications required by Rule 13a-14(a) (17 CFR
240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d 14(a))Exhibit 13.1
    
    Certifications required by Rule 13a-14(b) (17 CFR
240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d 14(b)) and
Section 1350 of Chapter 63 of Title 18 of the United States
Code (18 U.S.C. 1350)Exhibit 15.1
    
    Report of DeGolyer and MacNaughton
for Nippon Oil CorporationExhibit 15.2
    
    Report of DeGolyer and MacNaughton
for Japan Energy Development Corporation