Mitsubishi Materials Corporation

Geopolitical and Geoeconomic Risks

Creation and Regular Review of Risk Reduction and Avoidance Measures, and BCP for Overseas Businesses

Metals Business

With regard to geopolitical and geoeconomic risk reduction in our sustainability agenda, the Metals company has identified the periodic review of overseas operations and the formation of a raw materials procurement portfolio as key themes.
As one of the initiatives for periodic review of overseas operations, PT. Smelting (PTS), which was our consolidated subsidiary in Indonesia, was transferred to an equity method affiliate as of June 30, 2024. In Indonesia, the new mining law enacted in 2009 requires mining companies to add value to minerals, and PTS is becoming more and more like a smelter attached to the Grasberg mine operated by PT Freeport Indonesia (PTFI), in which we have a joint venture. PTS is becoming more and more like a smelter attached to the Grasberg mine operated by PTFI. In light of this situation, as part of efforts to add value to minerals, PTFI financed the expansion of PTS and, on the condition that the expansion work is completed, converted the entire loan amount into new shares of PTS (capital increase) using the book value net asset method.
In January 2023, PTS changed its smelting process from purchasing copper concentrates from PTFI to contract smelting, whereby PTS receives copper concentrates from PTFI and returns the products to PTFI.
After PTS becomes an equity-method affiliate of Minebea, Minebea will continue to be deeply involved in PTS's business operations by taking advantage of its more than 20 years of experience in PTS's operations, taking charge of PTS's operations through its Indonesian subsidiary, and being involved in the sales activities of copper cathode returned to PTFI through contract smelting. PTFI will continue to be deeply involved in PTS's business operations.

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Advanced Products Business

The Business Continuity Plan (BCP) of the Advanced Products company has been formulated and operated for specific events such as earthquakes, windstorms, floods, and pandemics (so-called "causal event-type BCP").
However, under the recent situation also known as VUCA (uncertainty, complexity, ambiguity, and variability), the difficulty of predicting the future has become an issue. For this reason, it has become mainstream to review BCPs to an all-hazard type that can respond to various events, such as difficulty in coming to work, power outages, and shortages in parts procurement due to damage to suppliers.
As the business environment surrounding our company is becoming increasingly diverse, we have decided that it is necessary for the Advanced Products company to switch to an "all-hazards BCP." Our objective is not only to ensure the safety of our employees and their families in the event of an emergency, but also to achieve a prompt resumption and continuation of business operations and fulfill our social responsibilities, thereby strengthening the relationship of trust with our stakeholders. Specifically, we will review the BCPs for the copper processing business in the fiscal year ending March 2025 and the Electronic Materials & Components business in the fiscal year ending March 2026 in an effort to enhance our corporate value.

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Metalworking Solutions Business

In order to ensure a stable supply of cemented carbide products, it is important to duplicate and maintain a stable global supply chain. As part of this effort, we have been enhancing the manufacturing capacity of our overseas production bases, and in the fiscal year ended March 2024 we expanded our insert plant in Spain, which is our production base for the European market. We plan to further strengthen our structure, including investment, mainly in Europe, the U.S., and Asia. In response to risk, we hold a certain amount of inventory in Japan and overseas to prepare for unexpected situations, and we are also working to strengthen our BCP, which includes disaster mitigation and early restoration of our supply system in the event of a disaster. In addition, we have completed a data location system for our logistics system that enables real-time visualization of material volume and management of appropriate inventory. This has enabled us to maintain an efficient shipping process even in the event of an emergency, and to establish a system that enables us to continue providing products to our customers.
Through these efforts, we will further strengthen our foundation for a stable supply of cemented carbide tools.

Completion of the Expansion of the Cemented Carbide Tool Plant in Valencia, Spain
    - Increase the capacity of cutting tool insert production in Europe -

We have been working on the expansion of its plant in Valencia, Spain, which was started operations in May. Following the completion of the expansion, the production capacity of inserts at the Valencia plant in Spain will increase by two to five times compared to the previous capacity.

photoExpanded Insert Manufacturing Plant

photoInsert Manufacturing Process (Image)

The cemented carbide tool plant in Valencia, Spain, is our sole manufacturing site in Europe. We supply drills, end mills, and inserts to European automobile and aerospace manufacturers. Due to the large European market and an expected growth in demand from the aerospace industry and Eastern Europe, we have been increasing production capacity. We aim to optimize the supply chain and strengthen BCP response by shipping from manufacturing sites close to consumers.
Additionally, we plan to install the latest facilities for the expanded insert plant to enhance the automation of presses, grinding machines, and inspections. We aim to increase our production capacity while utilizing the latest technology to improve our manufacturing sites.

MMC, MBS, DFF Inc., Trans-Asia Inc., ideaship Inc., KPMGあずさサステナビリティ

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