The Hishikari Gold Mine(Kagoshima Prefecture) · Climbing Mt. Besshi To Learn about Sumitomo The ascent to Besshi Mine “Rantoba” cenotaph Distillery smokestack Mine entrance No

The Hishikari Gold Mine(Kagoshima Prefecture)

President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01Corporate Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02Corporate Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03To Our Readers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04Company Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05

Special Feature Living in Harmony with the Environment From Hishikari to Alaska, Always paying due respect to Nature . . . . . . . . . . . . . . . . . . 06 The self-determination to protect the environment drives smelting and refining operations . . . . . . . . . . . . . . . . . . . . . . 08

Systems Supporting the Management Base Systems Supporting the Management Base . . . . . . . . . . . . . . 10 Introduction to Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Initiatives to Reduce Environmental Load A Numerical Overview of Environmental Burdens . . . . . . . . 12 PRTR and Management of Chemical Substances. . . . . . . . . . 14 Initiatives in Reuse of Resources . . . . . . . . . . . . . . . . . . . . . . 15

Initiatives to Prevent Global Warming Measures to Safeguard the Earth’s Environment. . . . . . . . . . 16 Examples of Initiatives to Prevent Global Warming . . . . . . 17

Contributing to environmental protection through advanced technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Contributing Member of Society . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Third-Party Opinion / Messages from Our Readers . . . . . . 21

Referenced GuidelineSMM has issued an Environmental Report (in Japanese only) annually since 2002. The current report has been prepared while making reference to the Ministry of the Environment’s “Environmental Report Guidelines” (2003).

Characteristics of the 2007 ReportTo deepen the understanding of readers toward SMM’s environmental initiatives, this year’s report contains a Special Feature demonstrating how the company’s mining and non-ferrous metals operations are conducted in line with its policy calling for harmonious co-existence with the environment. The 2007 Environment Report is the first provided in an English edition.

Scope of Environmental Load DataTo enable comparison with previous reports, data pertaining to initiatives to reduce environmental burdens centers on smelting/refining operations, the core business of the SMM Group.

Report TimeframeIn principle, the content of this report covers the period from April 2006 through March 2007.

Subsequent ReportThe 2008 Environmental Report is scheduled for release in October 2008.

InquiriesAddress inquiries to SMM’s Publicity & IR Department Phone: 813-3436-7705 Fax: 813-3434-2215　

URL:http://www.smm.co.jp/E/index.htmlSMM（Sumitomo Metal Mining）

Editorial Policy

President’s Message

President’s MessagePresident’s Message

The site of the Besshi Copper Mine today.

Not long ago, talk of an environmental problem of global scale tended to focus on acid rain caused by air pollution from SOx (sulfuric oxide), which causes forests to wither and aquatic life in lakes and marshes to die. While that problem has yet to be resolved, today an even larger problem is global warming, the effects of which are gradually becoming clear to people worldwide. Global warming is making it necessary for us not merely to reduce emissions of CO2 gas but also to forge a sustainable society in harmony with the environ-ment. This demand is necessitating stricter management of chemical substances at national and local levels worldwide, efficient use of energy and resources in the corporate sector through technology applications, and reductions in trash and recycling of valuable commodities at the individual and all other levels. In the wake of the critical accident at JCO, an SMM subsidiary, in September 1999, today we are conducting our business activities with a redoubled commitment to highest priority given to observance of laws. Presently, in a quest to improve our corporate value we are carrying out the 2006 Medium-Term Business Plan (spanning the fiscal years 2007 through 2009), and in this plan we state that the most important factors underpinning a business corporation are safety and health, environmen-tal protection and compliance. I assumed my post as SMM president on June 28 of this year, and I pledge to carry on this policy of my prede-cessor and to operate SMM in harmony with the environment. For 400 years SMM has been responding to environmental demands in its mine development and smelting/refining opera-tions, and as president I will strive to make use of those responses in a way befitting our times, striving to reduce environmental burdens from both our domestic and overseas business under-takings and to live in harmony and co-prosperity with local communities. Concerning reduction of environmental burdens,

even if we meet our near-term goals, no goal is the final one; as a business corporation, we have a duty to carry out improvements on a continuous basis. At SMM, we have introduced environmental management system into all operating bases and affiliated companies, and together we are working daily to reduce wastes and save energy. Because we consume large amounts of electric power and carbon-based fuels (heavy fuel oil, coal, etc.) in some processes within smelting and refining, one of our core business areas, we are also proceeding toward technology enhancements targeted at reducing CO2. Through our environ-mental and recycling operations, we are provid-ing technologies that promote environmental protection and are contributing to the efficient use of resources. SMM today is increasing its corporate value under a continuous growth strategy, in a quest to join the ranks of the world’s top corporations in the field of non-ferrous metals. Simultaneously, we look to contribute to society via the manufac-ture of products that impose minimal burden on the environment by virtue of our promotion of energy and resource conservation. We believe this is our mission at SMM, to carry on the spirit of harmonious co-existence with the environment that has been part of our corporate DNA ever since the opening of the Besshi Copper Mine. Going forward, we will continue to actively disclose environmental information as a way of acquiring the understanding of our stakeholders toward the environmental protection activities of the SMM Group. We sincerely ask for your continued support and encouragement.

Carrying on the SpiritOf Harmonious Co-existencewith the Environment

Nobumasa KemoriPresident and Representative Director

Sumitomo Metal Mining Co., Ltd.

President and Representative DirectorSumitomo Metal Mining Co., Ltd.

Nobumasa Kemori

01Environmental Report

Harmonious Co-existence with the Environment

“Monjuin Shiigaki”A document written in the 17th century by Masatomo Sumitomo, founding father of the House of Sumitomo. It forms the basis of the Sumitomo Business Spirit.

SMM shall proactively promote preservation of the global environment as a fundamental philosophy underlying the management of its business activities. By undertaking activities always in harmony with the environment, the Company will strive to leave an environment amenable to good living for future generations. In addition to observing all related laws and regulations, the Company shall independently and continuously apply the technologies and knowhow in environmental protection it has accumulated over many years and also develop new technologies focused on the achievement of two objectives:

Effective use of resources, recycling and energy conservation

Reduction of environmental burdens.

Sumitomo Metal Mining Co., Ltd. (“SMM”), in accordance with Sumitomo’s Business Spirit, shall, through the performance of sound corporate activities, seek to make positive contributions to society and to fulfill its responsibilities to its stakeholders, in order to win ever greater trust.

SMM shall, based on respect for all individuals and recognizing each person’s dignity and value, seek to be a forward-minded and vibrant company.

Taking to heart the lesson learned from the critical accident at the JCO subsidiary in September 1999, SMM has been focusing wholly on business operations in compli-ance with laws and strict safety management. In 2004, a new corporate philosophy was delineated based on the Sumitomo Spirit and new “SMM Group Action Guidelines” comprised of 17 items were formulated, and efforts are now under way to achieve total compliance by all company officers and employees.

Any action to make speculative profit is strictly forbidden; business is to be expanded or curtailed as necessary, taking into consider-ation changes in the times and the business perspective.

Above all things, steadiness and reliability are of the greatest importance for the prosper-ity and stability of the organization.

The Sumitomo Spirit

Article 1

Article 2

SMM Group Corporate Philosophy

SMM Group Action Guidelines

SMM Environmental Philosophy

1

2

12

(Photos of statue of Masatomo Sumitomo and “Monjuin Shiigaki” courtesy of SUMITOMO SHI-RYO-KAN)

Corporate PhilosophyCorporate PhilosophyCorporate Philosophy Corporate Culture

02 Environmental Report

Climbing Mt. BesshiTo Learn about Sumitomo

❶ The ascent to Besshi Mine❷ “Rantoba” cenotaph❸ Distillery smokestack

❹ Mine entrance No. 1❺ Kanki Mine❻ Jizo statue at Dozangoe

1 2 3 4 5 6

Corporate Philosophy Corporate CultureCorporate CultureCorporate Culture


Sumitomo’s business operations trace back to 1590, when copper refining and craftwork were started in Kyoto. A century later, in 1691, operations were launched at the Besshi Copper Mine in what today is Ehime Prefecture. The mine, of grand scale, was actively operated for 283 years, during which time it underpinned the development of the Sumitomo Group. All Sumitomo Metal Mining career-track employees climb up to the Besshi Copper Mine as part of their training directly after joining the company and when they are promoted to a management position. They are accompanied on these outings by their more senior colleagues, who provide explanations along the way. The uppermost section of the mine, known as “Old Besshi,” where ore mining headquarters were located until 1916, is situated near 1,000 meters above sea level, and here, in the deep valleys and on the steep mountain slopes that see snow cover in winter, at its most flourishing time 10,000 people lived and worked. Operations spanned from ore mining to primary smelting. A total of 132 employees, including the mine’s overseer, died here in a great fire. Others succumbed to massive flooding that swept through the flat land where stone arches were built in the valleys and stone walls were built on the slopes. Today a cenotaph known as Rantoba stands to honor their memory. Even now the visitor can see the traces of where there once stood a theater with a revolving stage, a weather station, school, Buddhist temple, Shinto shrine and a distillery. He can walk through the tunnels and inclined shafts carved into the mountain and along the paths where bullock carts once carried ore, traveling back in time to the era of Japan’s modernization in the Meiji period. Or

he can go even further back to Genroku days, in the late 17th century, and pass where the Kanki Mine was first excavated and copper ore is still exposed, and then ultimately ascend to Dozangoe at 1,200 meters, where a Jizo statue stands. It is here that we learn about the continuity of the business. A history of the Besshi Copper Mine published in 1940, in celebra-tion of its 250 years in operation, begins with the following words. “Our Besshi Copper Mine serves as the embodiment in an objective world of the most appropriate form of business continuity as a philosophy.” The desire to maintain a business over a long time is a feeling shared by most entrepreneurs. The Besshi Copper Mine achieved that aspiration. However, a business does not carry on continuously simply by wishing. Sumitomo’s ability to independently continue to operate the Besshi Copper Mine for 283 years owes not only to the enormous size of its ore deposit but also to the formulation of the philosophy expressed in the “Rules Governing the House of Sumitomo” (the original form of “The Sumitomo Spirit”: see page 2), to all those who carried on that philosophy, and to those who, in each era throughout the mine’s history, weathered numerous ordeals, at times even prepared to give their lives to the cause. It is because we believe that we have a duty to shoulder our share of the 400-year history of Sumitomo and to sustain that history into the future that, while carrying on the universal philosophy of our predecessors, we perform our business duties with future generations in mind, never leaving behind us any source of trouble for the next generation.

Executive Officer, General Managerof Safety & Environment Control Dept.

Editor-in-Chiefof the SMM Environmental Report

Takahito Kusada

Sumitomo Metal Mining has been engaged in mine development, smelting and refining for 400 years. Through all this time, in its quest to co-exist harmoniously with the natural environment and co-prosper harmoniously with local communities, the company has proactively implemented a variety of measures beneficial to the environment. Reforestation at the Besshi Copper Mine and relocation of a company smelter as a countermea-sure against air pollution are just two examples. SMM’s concern for the environment has been embraced continuously down to the present day. Today the company promotes environmental amelioration initiatives actively, as illustrated by its introduction of the ISO 14001 environmental management system (EMS) at the near 50 bases of operation it has acquired both at home and abroad. Moreover, the company’s head office and idled or abandoned mines, where small staffs perform management duties, are no exception. In these ways, SMM is undertaking environmen-tal enhancement measures on a companywide basis. In fiscal 2006 the company set a policy targeting aggressive measures to protect the environment and reduce environmental loads, and in line with this policy initiatives were pursued in promoting energy conservation, reducing wastes, preserving air and water quality, managing chemical substances, etc. The results of these efforts are reported in these pages. During the past year SMM also announced the 2006 Medium-Term Business Plan. The plan involves two business strategies: in the perfor-mance of mineral resources and non-ferrous metals operations, SMM seeks to become a major player in the non-ferrous metals industry; and in the performance of electronics and advanced materials operations, the company aims to secure a top-class market share worldwide for all its products.

In this year’s Environmental Report, a special feature presents an overview of SMM’s mineral resources and non-ferrous metals operations. In both of these areas, overseas developments are gathering speed, and it is no exaggeration to say that the company’s strategic objective is to become a major player in the non-ferrous metals market while maintaining harmony with the environment. In our special feature we focus on the environmental initiatives we are taking in these two areas: in mineral resources, how the technologies and experience cultivated at the Hishikari Gold Mine, which strives for harmonious co-existence with the environment and harmoni-ous co-prosperity with the local community, are being applied in overseas developments; and in non-ferrous metals, how the philosophy of clean smelting achieved at the Toyo Smelter & Refinery, is being realized overseas as well. Today, all business enterprises are being called on to respond to environmental issues with measures to fight global warming, reduce wastes, etc. At SMM, we still face many challenges, but carrying on the Sumitomo Spirit as well as the company’s commitment to live in harmony with the environment and with the local community, we renew our determination to improve our technologies and make products that impose minimal burdens on the environment. This year’s Environmental Report represents the sixth since these publications were launched in 2002 in order to foster a deeper understanding of the SMM Group’s stance toward the environ-ment and its initiatives being taken to deal with environmental problems. We eagerly invite your frank opinions and suggestions.

On Publication of the 2007Environmental Report

Mining specialist. As head of the Hi-shikari Gold Mine, introduced envi-ronmental and labor safety/health management systems. Assumed current post in June 2006. To strengthen and improve Group ac-tivities relating to safety, health and the environment, personally inspects more than 50 production bases each year.

“To become a major player in the non-ferrous metals industry, harmonious co-existence with the natural environment and harmonious co-prosperity with local communities are indispensable.”

Hishikari Gold Mine Declaration of Environmental Priority

To Our ReadersTo Our ReadersTo Our Readers Company Data

Takahito KusadaExecutive Officer,

General Manager of Safety & Environment Control Dept.Editor-in-Chief of the SMM Environmental Report


0

2,000

4,000

6,000

8,000

10,000

2004 2005 2006 2004 2005 2006 2004 2005 20060

300

600

900

1,200

1,800

1,500

2,100

0

200

400

600

800

1,000

1,200

1,400

Japan

North America

SoutheastAsia

East Asia

Other

Non-ferroues metals

Housing and construction materials

Other

Electronic and advanced materials

Mineral resources

Founded. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1590

Incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1950

Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.8 billion yen

President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nobumasa Kemori

Non-consolidated sales (FY 2006) . . . . . . . . . . . . . . 792.4 billion yen

Consolidated sales (FY 2006) . . . . . . . . . . . . . . . . . . 966.8 billion yen

Number of consolidated subsidiaries . . . . . . . . . . . 48

Number of equity-method affiliates. . . . . . . . . . . . . 13

Number of non-consolidated employees* . . . . . . . 2,175 (179)

Number of consolidated employees* . . . . . . . . . . . 9,551 (479)

Mineral resource developmentExploration, Mine development/operation, Consulting services, etc.Non-ferrous metalsGold, Silver, Copper, Nickel, Lead, Zinc, etc.ElectronicsElectronic materials, IC packaging materials, Crystal-related materials, Printed wiring boards, Fiber-optic materials, etc.Advanced materialsSubstrate materials, Powder materials, Functional inks, Battery materials, Magnetic materials, etc.OtherSiporex (ALC: autoclaved lightweight concrete), Nuclear power-related engineering, Environmental equipment, Precious-metal and chemical catalysts, Lubricating agents, etc.

Electronics Div./Ome Research Laboratories

Osaka Branch

Harima SmelterHyuga SmeltingCo., Ltd.

HishikariMine Dept.

Ohkuchi ElectronicsCo., Ltd

Head Office

Kunitomi District Div.

Sumiko Electronics Taiwan Co., Ltd.

IchikawaResearch Laboratories

Northparkes Mine

P. T. International Nickel Indonesia

Batu Hijau Mine

Nagoya Branch

Sumitomo Metal MiningAsia Pacific Pte. Ltd.

Besshi-Niihama District Div.Toyo Smelter & RefineryNiihama Nickel RefineryShisaka PlantIsoura PlantNiihama Research Laboratories

Jinlong Copper Co., Ltd. Sumiko Electronics Suzhou Co., Ltd.

Malaysian Electronics Materials SDN. BHD.

Sumitomo Metal Mening Electronics Materials (Shanghai) Co., Ltd.Shanghai Sumiko Electronics Paste Co., Ltd.

Ojos del Salado MineCandelaria Mine

Cerro Verde Mine

Coral Bay Nickel Corporation

Moneo Nakety Mine

Goro (under development)

Morenci Mine

Pogo Mine

◆Sales ◆Recurring profit ◆Net profit ◆Sales by region (consolidated)

◆Sales by business segment (consolidated)

Main Operating Bases

DATA

■Non-consolidated■Consolidated



Profile Business Operations

To Our Readers Company DataCompany DataCompany Data


(unit: billion yen) (unit: billion yen) (unit: billion yen)

* Full-time employees. Figures in parentheses are additional temporary staff.


Because mines can be operated only where ore deposits exist, we cannot choose their locations, and in this respect mining differs greatly from other industries. Normally, moreover, ore deposits tend to be located in places rich in natural wealth; this is true of all countries, including Japan. Indeed, mining seems to be fated to operation directly in Nature’s midst. Another fate – and mission – of mining, in light of its acceptance of the blessings of Nature, is to

restore mine sites back to their natural state once mining has been completed. A little known fact is that SMM continues to oversee and maintain closed mines, keeping a keen watch to ensure that there are no outflows of environmentally contaminant water, etc. The company also strives continuously to restore the natural state as it was prior to mining, for example by planting trees around the mine site. When developing a new mine, in addition to

Restoration of Nature’s rich bounty

From Hishikari to Alaska,Always paying due respect to NatureThe role of mining is not limited to exploring and developing ore deposits. Mining is a viable undertaking only when, once Nature’s bounties are received, the site is restored to its original natural state. Today,SMM is applying its rich experience in environmentally harmonious mining at home ‒ at Besshi and Hishikari ‒ to the development and operation of the Pogo Mine in Alaska and other overseas mines.

After receiving the bounties of Nature,

mine sites are returned to

their natural state. This too is

a major missionof mining operations.

The Pogo Gold Mine in Alaska remains rich in wildlife, salmon and other bounties of Nature.

In 1881, seedlings were planted at the Besshi Copper Mine to restore the deforested site to its original state.

The site of the Besshi Copper Mine today, its natural abundance restored.

constructing roads to the site as circumstances require, SMM must also build other infrastructure – electricity, water, etc. – and a living environment for mine workers and their families, including homes and schools. Owing to the grand scale of such undertakings, a variety of procedures must be followed, including acquisition of approval from administrative authorities at the national and local levels as well as the understanding of local residents. Along with rising awareness of environmental issues, measures to protect the environment are called for based on meticulous studies to assess environmental impact, etc. Simultaneously, it is also important to create a structure to achieve sharing of the mine’s economic benefits with local citizens. From this standpoint of seeking co-existence and co-prosperity with local residents also, a responsible response to environmental demands is imperative.

Special Feature Living in Harmony with the Environment

Gold

Nickel

Copper

Hishikari Mine

Batu Hijau Mine

Soroako Mine

Northparkes Mine

Cerro Verde Mine

Morenci Mine

Pogo Mine

Ojos del Salado MineCandelaria Mine


In recent years SMM has been focusing its efforts into securing stakes and interests in developing overseas mines. Starting with the Morenci Copper Mine (USA) in 1986, today the company has secured stakes in mines worldwide, including the Candelaria Copper Mine (Chile), Northparkes Copper Mine (Australia), Batu Hijau Copper Mine (Indonesia), Cerro Verde Copper Mine (Peru) and Ojos del Salado Copper Mine (Chile). With all of these mines, SMM participated in development projects led by JV partner companies, and it acquired only a minority share in each case. However, at the Pogo Gold Mine in Alaska, which began operations in 2006, SMM had a major share and led the mine’s development. Going forward, the company aims to make aggressive inroads into projects as the operator – a stance that will make SMM’s responsibility to protect the environment all the weightier.

The need to respond to environmental demands is no less important in mine development activities overseas than back home in Japan. In fact, given that such development is to be pursued within a different cultural setting, SMM must proceed with even more caution than usual. In that context, based on its commitment to coexist harmoniously with the environment – a commitment nurtured at the Besshi and Hishikari mines at home – SMM pledges in the performance of its overseas business activities to pursue co-existence and co-prosperity with the people who live around the site, never failing to pay due respect to the richness of local Nature.

Applying experience at home to projects overseas

SMM has been engaging in mining operations for more than 300 years, tracing back to the opening of the Besshi Copper Mine in 1691. In recent years nearly all mines in Japan have been closed and efforts are being focused on the development of mines overseas. The sole exception is the Hishikari Mine in Kagoshima Prefecture, where gold deposits are being developed. Hishikari is a relatively new mine, having opened in 1985, and the environmental initiatives that have been taken here have served as a model case for all subsequent development of mines overseas. In preparation for the opening of the Hishikari Gold Mine, SMM autonomously carried out an environmental assessment – well ahead of the installation of the legal regulation that later made such assessments mandatory in Japan. At the time, SMM engaged the services of a consulting firm to

evaluate the mine’s prospective impact on a broad array of factors, including meteorology, noise pollution and quality of river water; the company’s assessments were then submitted to the competent authorities. Even today, monitoring studies continue to be undertaken twice each year, with participants including experts in related fields, and their findings are reported to the relevant authorities. SMM’s implementation of these undertakings ahead of their time stems from the company’s strong awareness, ever since it launched operations of the Besshi Copper Mine, that mining cannot be viable as an industry unless measures are taken to safeguard the environment. Also, in developing the Hishikari Gold Mine, SMM laid down the fundamental plan of creating “a safe and clean underground operation.”That stance derived not only from the company’s commitment

Autonomous implementation of environmental assessment at Hishikari

The Hishikari Gold Mine in Kagoshima Prefecture is situatedin a lush mountain valley.

to ease the burden on the natural environment but also from its strong determination to create as favorable an environment as possible for the people who would be working there.

Engaged in many exploration activities both at home (Sazare, Hishikari) and abroad (Australia). At the Pogo Gold Mine, worked from the development planning phase; oversaw development, acquisition of environmen-tal approval and construction, enabling the startup of gold production. Currently working at Hishikari for the third time.

Mines in which SMM has stakes and interests

General Manager of Hishikari Gold Mine

Norifumi Ushirone

SMM’s Toyo Smelter & Refinery (Saijo City, Ehime Prefecture), where copper is produced, is widely known for its attention paid to environmental protection. Acclaimed as the world’s cleanest smelter, the Toyo facility avails of state-of-the-art technologies to manage wastewater, waste gases, etc. as thoroughly as currently possible. The road to winning this acclaim, however, was by no means an easy one. When the Besshi Copper Mine was opened in 1691, smelting was performed directly at the mining site; but as the scale of operations expanded, the smelting processes were shifted to the foot of the

mountain in close proximity to local villages. The sulfurous acid gas emissions generated through smelting caused damage to crops, with the result that starting in the 1890s Sumitomo became the target of harsh censure. To resolve this pollution problem, Teigo Iba, the second Director General of the House of Sumitomo, took the staunch decision to relocate smelting operations to Shisakajima, an uninhabited island in the Seto Inland Sea. This decision to move the smelter was possible because top management was strongly determined to resolve this environmental problem, rather than merely pay compensation for damages.

Strong determination to resolve environmental issues

The decisive decision to relocate the entire smelter was possibleonly because of management’s strong desire to resolve environmental issues.

The Toyo Smelter & Refinery, located in Saijo City, Ehime Prefecture

In 1905 copper smelting operations were shifted to Shisakajima, an uninhabited island in the Seto Inland Sea,in a quest to eliminate air pollution caused by sulfurous acid gas.

In 1939 a factory was completed where ammonia was used to neutralize sulfurous acid gas.

(Photos courtesy of SUMITOMO SHI-RYO-KAN)

The Director General’s zeal notwithstanding, unfortunately the technological level of those days prevented conquest of the company’s air pollution difficulties. After a long series of twists and turns, the problem was finally and wholly resolved in 1939 with the successful achievement of sulfurous acid gas neutralization and desulfurization technologies. As the foregoing illustrates, SMM’s commitment to environmental protection is an integral part of the history of the company’s business growth and is deeply etched as a factor indispensable to the way SMM conducts its business.

The self-determination to protect the environment drives smelting and refining operationsLegal compliance alone is not enough when it comes to constructing and operating smelters and refineries at home or abroad. What is also called for are a strong sense of responsibility and determination to take steps to protect the environment.


Special Feature Living in Harmony with the Environment

Besides abiding by regulatory requirements laid out under local laws, measures that are deemed necessary are carried out autonomously even when legal obligations are not imposed. For example, the Philippines has no laws regulating against wastewater containing manganese. In Japan, the regulatory limit is 10mg/l; in North America, 1mg/l. SMM opted to clean wastewater in line with the strictest standards, those of North America, and toward that end the company developed new technologies. With regard to hydrogen sulfide, the company opted to reduce stored supplies to the maximum extent (roughly half the amount normally handled in Japan), and in consideration of any potential terrorist threat hydrogen sulfide is stored out of sight inside a concrete building. Measures have also been devised to deal with a potential leakage of toxic

substances, in which case the plant can be immediately blocked to keep damage to a minimum. Compliance with laws is a given, but to go beyond the norm SMM believes that above all it is important to carry out business operations with a strong sense of responsibility and determination to protect the environment through its own initiatives. Today SMM is planning the construction of a new HPAL plant at a separate location in the Philippines. Environmental assessments are going forward in line with global standards, with local staff participat-ing in the planning phase. Their inclusion is a manifes-tation of SMM’s desire to pass on to locals its own deep cognizance of environmental protection nurtured throughout the company’s history. SMM looks to convey to people everywhere the philosophy it has embraced for more than 300 years.

Determined to always go one step beyond the norm

Today, as Japan’s only producer of electrolytic nickel, SMM supplies electrolytic nickel of the world’s highest quality enabled by matte chlorine leach electrowinning (MCLE), the company’s proprietary wet refining technology. As its raw material, since 2005 SMM has been producing an intermediary product of nickel at Coral Bay Nickel Corporation, an SMM Group operation site located in the Philippines. The product is made using a technology known as high-pressure acid leaching (HPAL), which enables processing of low-grade ores not possible with earlier technologies. The responses to environmental problems cultivated in the home market through the years today are being applied to smelting and refining processes overseas like those at Coral Bay. Prior to the launch of operations at Coral Bay, more than 30 Filipino

operators, who play the key roles at the site, were provided thoroughgoing instruction in Japan in environmental protection and safety/health manage-ment. Needless to say, their studies included the history of SMM’s struggle to vanquish air pollution. The company also strives to disclose information to the maximum extent feasible. As an example, local representatives involved in environmental monitoring were invited to view the receiving procedures for sulfuric acid. Meticulous measures, including the placement of double and triple safety nets, are taken to prevent leakage of sulfuric acid and other toxic substances. Also, environmental protection takes precedence over short-term costs; in the construction of landing piers, for example, construction siting is performed so as to avoid coral reefs.

Local operators given thorough education in environmental protection

Autoclave facility at Coral Bay Nickel Corporation in the Philippines. Ore is melted by sulfuric acid and heated to a high temperature, and high pressure is applied that enables isolated extraction of the nickel and cobalt components.

At Coral Bay Nickel Corp., issues of various kinds are resolvedat staff meetings attended by both local and Japanese staff.

Hydrogen sulfide plant at Coral Bay Nickel Corporation

Participated in total conversion of the Niihama Nickel Refinery from matte electrolysis to MCLE. Later, took part in a project to produce electrolytic nickel from low-grade nickel oxide ore using HPAL technology; succeeded in achieving commercial production for the first time worldwide.

Executive Officer, Senior Deputy General Manager of Non-Ferrous Metals Div. and General Manager of Overseas Project Dept.

Naoyuki Tsuchida


In 1993 the production process at the Niihama Nickel Refinery(Niihama City, Ehime Prefecture) underwent a total conversion from matte electrolysis to MCLE, which uses chlorine to refine nickel.

SMM has a number of systems in place to support the company’s management base, including EMS, QMS, RMS and OSHMS. These systems are of great variety: some involve receipt of certification from certifying institutions; others, the operation of systems developed independently; and others, the introduction of one portion of an established framework. All systems, however, are operated with the prime focus on performance improvement. EMS, for example, is a system aimed at environmental protection and prevention of pollution, and it incorporates mechanisms for compliance with laws and regulations. In the wake of the critical accident at JCO, an SMM subsidiary, EMS was introduced at roughly 50 sites, including affiliated companies, in order to reestablish a framework for compliance with laws, regulations and rules as the company’s management base. Today initiatives aiming at continuous improvements are being taken at all of these sites in line with specific goals pertaining to environ-mental protection and pollution prevention, EMS’s objectives. The company’s various management systems are all operated with a core focus on compliance.

SMM’s management systems

Among other functions that support SMM’s management base are compliance training and internal control systems. In the matter of compliance, the aim goes beyond mere observance of laws and regulations. Training sessions are held regularly to mull what society seeks in the name of “compliance,” and the latest outside information is gathered continuously with a focus on approaches to and understanding of related issues. With respect to internal control systems, while reviewing the various constraining functions originally in place – a move occasioned by revisions to

Japan’s Company Law implemented in May 2006 – Groupwide initiatives are implemented not only to root out false reports of financial information but also to build frameworks to prevent recurrence of any scandals.

Compliance initiatives

Measures are also being taken to ensure the collective functioning of these systems both in the company’s current business activities and in the diverse projects to be undertaken in the future, to enable SMM to properly carry out its social responsibility. Often, a common tendency is to slip into system framework building or formalized activities, but SMM looks to engage in ongoing activities with its feet firmly planted on the ground and a constant eye on aims and goals.

Activities targeted at results

EMS：Environmental Management SystemISO 14001 framework targeting environmental protection and pollution preventionQMS：Quality Management SystemISO 9001 framework targeting enhanced customer satisfactionRMS：Risk Management SystemAn SMM risk management framework for averting serious risk outbreaks and, in the event of a risk failure, minimizing impact and damageOSHMS：Occupational Safety and Health Management SystemA framework for raising levels of occupational safety and health management. Within the SMM Group, risk assessment is carried out at all domestic district divisions.

SMM’s management

base

Informationsecurity

Internalcontrol systems

RMS

QMS

EMS

OSHMS

Safety and health, environmental protection and compliance are the most important factors supporting a company so that

it can conduct its business operations smoothly and effectively in order to achieve its management targets.

At SMM, a variety of management systems are operating toward those ends.


Systems Supporting the Management Base

As examples of management systems that serve to strengthen the company’s management base, here we introduce the EMS (Environmental Management System) of the Sagami Plant in the Electronics Division, compliance training in the Personnel Department, and the risk management activities of the Risk Management Department.

The Sagami Plant acquired ISO 14001 certification in August 2001, but to take EMS to a higher level in July 2006 we launched a program of indepen-dent initiatives referred to as “5SMM Activities.” The 5S’s refer to five (Japanese) words all starting with “s”: seiri (orderliness), seiton (everything in its proper place), seiso (cleaning), shitsuke (discipline) and seiketsu (cleanliness). MM signifies “mieru (visible) management,” and specifically it entailed installation of whiteboards at each work area that display – in a visible manner – information for all workers to share relating to progress toward resolving various issues, including environmental targets. For each workplace a person was chosen to be in charge, and as a result of carrying out “5SMM Activities” things that had long been taken for granted and were therefore overlooked became objects for reconsideration, with the result that the plant substantially reduced its environmental load. One example is improvement made to the production process of metal prod-ucts. By shifting from additives that contain xylene, which impose a great burden on the environment, to those containing no xylene, not only were emissions reduced but, through innovations made to operating conditions, we succeeded in reducing power consumption by roughly 50%. To deal with the oil used in vacuum pumps, testing of filters on actual equipment enabled the selection of filters performing the most effective removal of impurities in the oil. The chosen filters are to be installed within the 2007 fiscal year, enabling a significant reduction in the frequency of

oil changes. Depending on the pump, in some cases only one oil change will be necessary every three months, as opposed to once each week until now. Our intention is to implement “5SMM Activities” more vigorously from now on, as a way of reducing power consumption, oil waste, industrial waste, etc.

Introduction to Activities

EMS (Environmental Management System)

Starting in fiscal 2005 we began rethinking our compliance training program, and from fiscal 2006 we instituted training along two vectors: a basic course and an advanced one. The basic course is targeted at new division managers et al., and the advanced course is primarily for presidents of affiliate companies and division managers. The focus of the basic course is to nurture a spirit of compliance and pro-vide or renew familiarity with basic knowledge. The advanced course aims to enhance knowledge with respect to recent legal revisions, etc. In fiscal 2006 we invited a legal advisor to speak about disgraceful in-cidents in the corporate sector, and we deepened knowledge concerning the revised Industrial Safety and Health Law.

Compliance training

In 2003 SMM compiled guidelines for responding in the event of a serious environmental accident, etc. Based on those guidelines, a risk management structure has been set up in all necessary departments. A major distinguishing feature is that the system encompasses not only immediate measures to be taken but, on a deeper level, issues such as reporting to public authorities, providing explanations to stakeholders, responding to users and so forth. Also, by conducting drills on a regular basis efforts are being made to ensure proper liaisoning and sharing of information in the event of an emergency. The drills enable clarification of problem points that cannot be known simply by engaging in hypothetical discussions, and we are constantly working to improve systems to make them ever more effective.

Risk management activities

Manager of Risk Management Dept.　

Masaichi Egawa

Last autumn I noted in a PR magazine of the area where I live that an “environmental expo” sponsored by the local government was under way, and I went to see it. It intro-duced ready ways of being friendly to the environment, like reducing use of plastic bags, and I’ ve been making a point of doing these things ever since.

Manager of Engineering,Safety & EnvironmentControl Group,Sagami Plant, Target Materials Dept., Electronics Div.

Kazuo IijimaAn avid angler, I often go sea fishing. Unfortunately, some people leave fishing lines with hooks still attached to them on beaches and jetties. It would be awful for a dog to come along and put one in his mouth unawares, so when I find such lines I take them home and dispose of them properly.

Supervisor of Personnel Dept.　

Ken Saito

When I was a new employee I was assigned to the Toyo Smelter & Refinery, and whenever I would show for-eign guests around they would compliment us on having a beautiful plant. I look to keep the company one to be proud of, environmentally and in other aspects also.


A Numerical Overview of Environmental Burdens

Electrolytic copper (Toyo Smelter & Refinery)

Used primarily as a material in copper wiring and copper alloys.

Crude zinc oxide (Shisaka Plant)

Recovered from recycled materials; raw material for distilled zinc.

Sulfuric acid(Toyo Smelter & Refinery, Harima Smelter)

Used as an industrial chemical.

Electrolytic nickel (Niihama Nickel Refinery)

Used in special steels, as an electronic and battery material, and in coins.Zinc-based materials are powders whose main component is the iron

oxide produced in an electric steel furnace. They contain zinc.

Heavy fuel oils are used primarily as heating fuel. Coke is used as a reducing agent in zinc and lead smelting and refining, etc.

Nickel sources are raw materials for manufacturing electrolytic nickel products. They include matte (nickel subsulfide), which is a near 70% grade nickel derived from sulfide ores, and nickel from oxide ores that has been concentrated as sulfide.Nickel oxide ore is a raw material for manufacturing ferro-nickel products. It is also known as garnierite ore.

Copper, zinc and lead concentrates are concentrated to 30-50% grade metals by dressing the sulfide ores excavated at overseas mines.

Energy

Heavy fuel oils 69,000kl

Coal and coke 222,000t

Purchased electric power 1,100,000Mwh

Fresh water 15Mt

Materials

Silica 77,000t

Soda-based chemicals 38,000t

Recycled materials

Zinc-based materials 110,000t

Raw materials

Copper concentrates 1,080,000t

Hishikari ores 98,000t

Copper scrap 35,000t

Zinc and lead concentrates 79,000t

Zinc and lead scrap 56,000t

Nickel sources 46,000t

Nickel oxide ore 840,000t

The SMM Group pursues an understanding of resource and energy usage volumes and total environmental load, and engages in a broad palette of activities to reduce environmental burdens. Here, we offer tabulated data on the Group’s input and output of its metal smelting and refining operations in fiscal 2006.

Mt: million tons

MWh:million Wh

Resources and energy Output of

Initiatives to Reduce Environmental Load


Wastes

Industrial waste landfill volume 130,000t

(includes 3,100t of PRTR substances)

Primarily consists of slag produced during zinc and lead smelting and residue from zinc recovered from recycled materials.

Distilled zinc (Harima Smelter)

Widely used as a coating material for steel sheets.

Electrolytic lead (Harima Smelter)

Used in lead batteries, sound-insulat ion boards, etc.

Slag (Toyo Smelter & Refinery, Hyuga Smelting Co., Ltd.)

1-5mm granularity; used as artificial sand in concrete aggregates, etc

Ferro-nickel (Hyuga Smelting Co., Ltd.)

Used as a material for stainless steel.

Gold (Toyo Smelter & Refinery)

Used as an electronics material, in jewelry, etc.

Products

Electrolytic copper 366,000t

Gold 44t

Distilled zinc, electrolytic lead 105,000t

Electrolytic nickel 29,000t

Ferro-nickel 94,000t

Sulfuric acid 1,100,000t

Emissions into the atmosphere

CO2 (carbon dioxide) 1,441,000t

SOx (sulfur oxide) 1,600t

NOx (nitrogen oxide) 540t

PRTR substances 6t

PRTR substances 17t

Emissions into water

COD (chemical oxygen demand) 69t

The iron component in copper ore reacts with silicic acid (SiO2), fuses, and is then pulverized using high-pressure water to produce granulated slag (glass particles). The silica and magnesium oxide in nickel oxide ore are fused during the ferro-nickel manufacturing process to become granulated slag.

The sulfur component in copper, zinc and lead concentrates is recovered as sulfuric acid.

SOx is contained in the waste gas from the smelting phase of the sulfuric acid production process. NOx is contained in the waste gas from the boiler.

The amount of organic substances contained in wastewater.

Slag 1,300,000t

Products and wastes smelting and refining


0

500

1000

1500

2000

2500

3000

4000

3500

2004 2005

0

(ton)

(ton)

(ton)

500

1000

1500

2000

2500

3000

3500

2004 2005

Portion excluding recycling operations Recycling operations

Atmosphere Water Soil

Release Transfer

0

20

40

60

80

100

120

140

160

200

180

2004 2005

2006

2006

2006

147

155

2303

3314

173

3107

1320

826

1477

1994

1071

2036

3259

92

113

55

115


PRTR（＊1）and Management of Chemical Substances Table 1 shows the SMM Group’s PRTR results for fiscal 2006. As seen in Graph 1, the total volume of released and transferred pollutants increased roughly 5% over fiscal 2005. The volume of released pollutants decreased some 15% but the quantity of pollutants transferred rose about 6%. A breakdown of released pollution shows, as described in Graph 2, that pollutants released into water held at the year-earlier level while pollutants released into the atmosphere decreased near 40%. The decrease owed to a significant drop in releases of dichloromethane, attributable primarily to reductions

in the number of business divisions handling this chemical compound and in the volume of dichloromethane handled. By contrast, the total volume of transferred pollutants, excluding recycling operations, increased in fiscal 2006, as shown in Graph 3. The increase derived from expansion in the scope of substances subject to reporting. Going forward, the SMM Group will continue to promote its PDCA cycle for its Environmental Management System and strive for ever more effective manage-ment of chemical substances.

0.0 0.7 0.0 0.0 0.0

0.4 0.4 0.0 0.0 1.2

0.0 0.0 0.0 0.0 2.2

0.0 0.0 0.0 0.0 2.1

0.0 0.0 0.0 0.0 0.4

0.0 0.0 0.0 0.0 0.6

0.0 0.0 0.0 0.0 1.5

0.1 0.1 0.0 0.0 4.2

2.2 0.0 0.0 0.0 0.5

0.0 0.0 0.0 0.0 2.4

0.6 0.0 0.0 0.0 96.3

0.2 0.0 0.0 0.0 0.8

0.1 0.0 0.0 0.0 24.3

1.1 0.0 0.0 0.0 0.0

0.2 0.0 0.0 0.0 0.0

18.3 0.0 0.0 0.0 0.8

0.0 0.0 0.0 0.0 1.5

0.0 0.0 0.0 0.0 1.4

0.0 0.0 1.0 0.0 0.0

0.0 0.2 0.0 0.0 0.5

0.0 0.0 0.0 0.0 2.2

0.0 0.4 0.0 0.0 32.5

3.4 0.0 0.0 0.0 8.0

2.7 1.1 0.0 0.0 580

0.0 0.0 0.0 0.0 10.1

2.8 0.7 0.0 0.0 109

0.0 0.0 0.8 0.0 0.0

0.1 2.0 0.0 0.0 25.3

0.0 20.3 0.0 0.0 2.4

0.0 79.0 0.0 0.0 321

0.2 0.2 0.0 0.0 13.0

0.0 6.3 0.0 0.0 2040

0.1 0.9 0.0 0.0 30.3

92.0 0.0 0.0 0.0 0.0

1 Water-soluble zinc compounds

2 2-amino ethanol

3 Antimony and its compounds

4 Asbestos

5 Ethylene glycol

6 Ethylene glycol monomethyl ether

7 Ethylene diamine tetra-acetic acid

8 Cadmium and its compounds

9 Xylene

10 Silver and its water-soluble compounds

11 Chromium and chromium (III) compounds

12 Chloroform

13 Cobalt and its compounds

14 Ethylene glycol ether acetates

15 Inorganic cyanide compounds

1 6 Dichloromethane (methylene chloride)

17 N,N-dimethylformamide

18 Organic tin compounds

1 9 Styrene

20 Selenium and its compounds

21 Thiourea

22 Water-soluble copper salts

23 Toluene

24 Lead and its compounds

25 Nickel

26 Nickel compounds

27 Barium and its water-soluble compounds

28 Arsenic and its inorganic compounds

29 Hydrogen fluoride and its water-soluble compounds

30 Boron and its compounds

31 Formaldehyde

32 Manganese and its compounds

33 Molybdenum and its compounds

34 Dioxins

Graph 1 Pollutant release and transfer volumes

Graph 3 Breakdown of transfer volume

Graph 2 Breakdown of pollutant releases

＊1 PRTR（Pollutant Release and Transfer Register）A system requiring manufacturers of toxic chemical substances to register and make public their volumes of such pollutants released into the environment (atmosphere, water, soil) or contained in their transferred wastes.

Table 1 SMM Group PRTR results for FY2006

(unit: mg-TEQ)）

No　　　　Chemical substance

(unit: t)

Atmosphere Water Soil Sewage Waste

Release volume 　　　 Transfer volume

Initiatives to Reduce Environmental Load

＊　　There are no releases from company landfill.＊＊　Number of chemical substances reported: 44. Except for dioxins, listings only include substances whose amounts exceed 0.1t.＊＊＊ Amounts below the first decimal place are rounded down.

Notes

0

20

40

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160(unit :1,000t)

2006200520040

20

40

60

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200620052004

Graph 1: Industrial waste landfill

33

64

64

72

7355


Initiatives in Reuse of Resources In fiscal 2006 the volume of industrial waste landfill generated by SMM Group companies approached 145,000t, constituting a near 17,000t increase over the pre-vious year (Graph 1). The increase was attributable primarily to an increase by some 24,000t from expanding operations in recycling. Recycling operations now ac-

count for 54% of all landfill. The major portion, approximately 80%, of Groupwide industrial waste landfill con-sists of slag, followed by sludge (Figure 1).

In conjunction with core operations in metal smelting and refining, SMM takes the copper, nickel, lead, etc. contained in raw materials and smelts and refines them into metals. The more modest quantities of gold, silver and other precious metals contained in raw materials are recovered and made into products. The sulfur content is recovered as sulfuric acid, and the remaining iron, silica, magne-sium oxide, etc. are smelted to form slag, a glass-type substance which, after pulverization and classification, is made into products. Together with copper slag and ferro-nickel slag, the total volume comes to 1.3 million tons (see page 13), and as artificial sand this is put to effective use as concrete aggregates, etc. In addition, however, roughly 100,000t of slag is produced which is of a

Figure 1: Industrial waste landfill breakdown

Sludge 15％

Other 5％

Slag 80％

After pulverization and classification, copper slag is used as concrete aggregates. (Toyo Smelter & Refinery)

Graph 2: Volume of recycled items treated

quality not suitable for conversion into products, and this must be placed as landfill. How to make products from this inferior slag is an issue needing to be addressed, and R&D is now proceeding in that direction. In the company’s recycling operations, valuable or rare metals contained in items recycled from other industries are recovered through application of the separation technology from non-ferrous smelting and refining, and in this way SMM contributes to effective use of resources. Although the bulk of the residue thus produced must currently be deposited as landfill, the possibility exists that it may be recyclable by related industries, and initiatives are actively being pursued toward resolving this issue also.

Waste generated by recycling operations

Waste generated by all other operations

1,000

1,400

1,500(unit: 1,000t)

1990 2002 2003 2004 2005 2006

1990 2002 2003 2004 2005 2006

1,450

1,350

0.75

1.00

0.90

0.95

0.85

0.80

target line

1,094

1.369 1,383

1,431

1,441

1,470

1.0

0.944

0.887

0.920

0.846

0.804

Measures to Safeguard the Earth’s EnvironmentTo prevent global warming, the SMM Group is working aggressively to save energy. Here we introduce examples ofhow energy is being conserved in smelting and refining operations, which account for some 80% of total energyconsumption within the Group, and initiatives being taken by Sumiko Logistics Co., Ltd., which is in charge of SMM’sphysical distribution operations.

In 1997 the non-ferrous metals smelting and refining industry hoisted a target to reduce energy consumption by more than 10%, in parameters of basic unit of energy*, in 2010 as compared to 1990. In 2006 the target was further clarified and set to be the average of the years spanning from 2008 to 2012. SMM has been working to cut its energy usage and emissions of greenhouse gases in line with that target. Metal smelting and refining operations account for approximately 85% of all CO2 emissions generated by the SMM Group. Ferro-nickel operations, which account for near 40% of that figure, today are in a trend toward increasingly lower grades of nickel available as raw material, with the result that more and more coal is being consumed as a reducing agent on the processing line. Similarly, zinc smelting and refining operations today are consuming increasingly larger

amounts of coke in order to treat large volumes of recycled materials. In 2006, in spite of the foregoing changes in the raw materials situation, consump-tion of coal and coke was successfully curbed through measures such as altering the shapes of the raw materials being fed and improving feeding methods. In addition, total CO2 emissions were reduced and the basic unit of energy was further lowered by raising the energy efficiency of equipment at all smelters and re-fineries – enabled by upgrading to motors with inverter drive, introducing high-efficiency transformers, etc. – and by improving the operating conditions of existing production facilities and converting to and achieving high availability of the newest facilities.

* Basic unit of energy: energy consumed per 1t of product

SMM has been working to reduce energy consumed not only in conjunction with its operations but also energy used in transport. Conservation of transport energy became obligatory under revisions to the Law Concern-ing the Rational Use of Energy implemented in 2006, but SMM has been undertaking the modal shift since well before that time. Of the near 400 million ton-kilometers* in transport logged by the company during 2006, roughly 89% took the form of ship movements, which are highly energy-efficient.

*Ton-Kilometer(t・km) : a unit for expressing quantity of cargo transport distance. As an example, 10 tons of cargo traveling 5 kilometers equates to 50t・km(10×5).

What is the modal shift?

Generally, a modal shift refers to a switch in cargo transport methods. In the field of environmental protection, it specifically indicates the change from reliance on truck and air transport, which consume energy in large volumes, to dependency on rail and ship transport, which consume more modest amounts of energy.

Undertaking the modal shift can be expected to yield the following merits:• Energy savings• Prevention of air pollution• Easing of traffic congestion• Prevention of global warming through reduced CO2 emissions

Current energy usage

Transport energy reduced

* Change from previous year: In line with the Law Concerning the Promotion of the Measures to Cope with Global Warming, the emission factor of purchased electric power has been changed to 0.555t/1,000kWh

● Total CO2 emissions (non-ferrous metal smelting & refining operations)

* 1990 is assigned a value of 1.● Basic unit of energy (non-ferrous metal smelting & refining operations)

Initiatives to Prevent Global Warming


Examples of Initiatives to Prevent Global WarmingThe SMM Group is implementing an array of initiatives toward preventing global warming. Here we introduce the initiatives of the Toyo Smelter & Refinery, the main factory in the Non-Ferrous Metals Division, and Sumiko Eco-Engineering Co., Ltd., which conducts environmental engineering operations.

What is CDM?

CDM stands for “Clean Development Mechanism.” This is a mechanism whereby the developed countries can acquire greenhouse gas emission rights by providing technical and financial assistance to developing nations. To prevent global warming, numerical targets were set for each country and region at the 3rd Conference of the Parties to the United Nations Framework Convention on Climate Change (COP3), convened in Kyoto in 1997. Japan’s target is a 6% reduction compared to 1990. CDM projects are actively under way as a means of achieving these targets.

Energy conservation

Epochmaking initiatives to reduce power consumption are under way at the Toyo Smelter & Refinery, where copper concentrate is smelted to produce electrolytic copper. In 2006 a converter blower here was upgraded to inverter specification. An inverter is a device capable of freely changing electrical frequency according to the electrical circuitry. As it is capable of adjusting motor rpm with minimal energy loss, it saves energy by curbing power consumption. The role of a converter is to produce blister copper (98% grade copper) by blowing air and oxygen into the matte (60-65% grade copper sulfide) exiting from the flash smelting furnace during front-end processing. The inverter was newly installed in the blower that blows air into the converter. A converter operates intermittently according to the processing in progress, and in total it is idle about one-third of every day. If the blower’s power is switched off, however, a large volume of power is required to restart it. For this reason, until now when the blower was not in use its speed was re-duced by generating energy loss using a liquid resistor, and the blower was left idling.

The objective in introducing the inverter was to lower the rpm of the motor with minimal loss, as a way of curbing power consumption during idling. As a result of its installation and startup in November 2006, power consumption during idling has been reduced to one-eighth its previous level. That saving translates to a reduction in CO2 emissions by approximately 360t p.a.

Adoption of inverter in converter blower has slashed power consumption during idling to one-eighth the earlier level

Reduction in greenhouse gas emissions

Sumiko Eco-Engineering Co., Ltd., an SMM Group company, has cooperated in the CDM projects of a leading trading house with its development and delivery of a nitrous oxide (N2O) decomposer. N2O is a gas having 310 times more greenhouse effect than CO2. It is emitted at chemical plants producing fertilizers, etc. The decomposition system developed by Sumiko Eco-Engineering breaks down N2O into nitrogen and oxygen, which are both safe and harmless. A highly efficient system was achieved through the use of a catalyst, indispensable to such decomposition, made by another SMM Group company, N.E. Chemcat Corporation. The new device has already been delivered to CDM projects in Pakistan, China and Korea, and inquiries have been received from regions

everywhere, including Eastern Europe, South America and Asia. Plans thus call for continuing cooperation in numerous projects in the years ahead.

Active cooperation in CDM projects through development of a new device incorporating a high-performance catalyst

N2O decomposer installed at fertilizer manufacturing company in Hunan Province, China

Converter blower at the Toyo Smelter& Refinery


For the past several years SMM has been conducting R&D on sapphire substrates. Sapphire is an aluminum oxide that can be created by artificial means, but to obtain crystals that are usable industrially, a wealth of technological hurdles must be overcome. SMM, as a manufacturer of an array of crystal products including gallium phosphide (GaP), has addressed those challenges applying its outstanding technologies and knowhow in crystal production. Sapphire gemstones emanate a variety of colors due to the presence of impurities. By contrast, industrially made sapphires contain no impurities and are therefore transparent. Industrial crystals, grown in conical formations, are cut into wafers and their surfaces are mirror-polished prior to

shipment. Because sapphires are second in hardness only to diamonds, cutting and polishing them are no easy tasks. SMM, however, relying on its unique technolo-gies in high-precision crystal processing, has achieved mirror-surface polishing of a level to satisfy all customer requirements. At SMM, R&D relating to sapphire substrates has been conducted at the Ome Research Laboratories. In fiscal 2006 development came to fruition, and in April 2007 the technology was put into practical use by the Electronics Division (Crystal Department). Currently the company has capacity to produce 5,000 3-inch wafers per month.

Applying advanced technologies in crystallization and mirror-surface polishing

Sapphire crystal

Sapphire substrates

LEDs are distinguished by their higher energy efficiency and longer service life compared to incandescent and fluorescent lamps. With traffic lights, for example, LEDs consume roughly one-fifth the power of and last approximately 10 times longer than conventional bulbs. If all the traffic signals in Japan are switched to LEDs, the benefit in terms of reduced heavy fuel oil usage is estimated at 210,000 kiloliters per year*. Although LEDs are available in a variety of colors including red and blue, it is white LEDs that are garnering attention as the lighting of the next generation. In the coming years, white LEDs are expected to come into practical use, for example, in indoor lighting superseding fluorescent lamps, in automobile headlights and as backlights in LCD televisions. It is estimated that if 10% of Japan’s indoor lighting is replaced with white LEDs, 500,000 kiloliters of crude-oil equivalent would be saved per

year.* Also, unlike fluorescent lamps, LEDs contain no mercury, and this is another advantage of LEDs, that they would reduce environmental burdens. LEDs emit light when voltage is applied to gallium nitride (GaN). Sapphire is used as the substrate material necessary to mount the gallium nitride. Sapphire is optimally suited as the substrate for growing crystals because its own crystal structure is similar to that of gallium nitride. SMM employs a water-based cutting fluid in the sapphire substrate manufacturing process in place of conventional oil-based fluid. The substitution is more friendly to the environment and enhances workability and safety. SMM’s aim today is to develop more advanced technologies that will enable wider applications of white LEDs in the years ahead, to make even greater contributions to environmental protection.

Substrate material necessary for energy-saving, long-life white LEDs

SMM is pursuing the development of technologies to protect the environment andreduce environmental burdens. Here, we will highlight a sampling.

Supporting white LEDs*, the next generation in lighting

Sapphire substratesThe sapphire substrates manufactured by SMM are a substrate material indispensable to white LEDs, which are expected to become the lighting of the next generation. Replacement of conventional fluorescent and incandescent lamps with white LEDs will contribute to significant energy savings.＊Light-Emitting Diode: a semiconductor element that emits light when electric voltage is applied to it

Separating trash and saving electricity are impor tant ways o f protecting the environ-ment, but it is difficult to see the results in tangible terms. However, I always tell my children that the small efforts we make today will add up to protecting the Earth’s env i ronment 50 or 100 years from now.

Contributing to environmental protection through advanced technologies

*NEDO’s (New Energy and Industrial Technology Development Organization: an “independent administrative agency”) “Light for the 21st Century” project plan

Section Chief, Sapphire GroupCrystal Department, Electronics Division and Head of Research, Ome Research Laboratories

Takayuki Iino


In recent years treatment of soil contaminated by heavy metals on former factory sites, etc. earmarked for redevelopment has become a major problem. Today, a system for remediating soil contaminated by heavy metals is operated by Sumicon Certech Co., Ltd. in Amagasaki, Hyogo Prefecture. The facility can remove heavy metals such as lead, arsenic, cadmium, hexavalent chromium, selenium and their compounds as well as mercury and its compounds, plus fluoride and boron and their compounds. Use of this soil remediation system enables reuse of most contaminated soil and thereby reduces harmful waste. Sumicon Certech, relying on SMM’s technologies for measuring the distribution of the metallic compo-nents within substances, established technologies

for precisely identifying levels of soil contamination by degree of granularity, locations where contami-nants are present, and the forms in which contami-nants exist. By systematically combining screening and washing processes matching those diagnostic results, Sumicon Certech’s system enables an outstanding soil reuse rate and high throughput. The plant, which went commercially onstream in November 2006, has capacity to treat up to 300 tons of soil per day. Following sorting and washing, roughly 80% of soil received at the plant is reusable. An on-site system has also been developed that can be assembled and used directly at the contamina-tion site, and this system is now being actively put to use to remediate soil.

Soil remediation enabling 80% recyclingHeavy-metal-contaminated soil remediation system

Toyota Vitz, equipped with idle-stop system

LNO (lithium nickel oxide) powder

Applying heavy metal analysis technologies

Heavy-metal-contaminated soil remediation system

Sumicon Certech Co., Ltd., a Group company located in Amagasaki, Hyogo Prefecture, is operating a plant equipped with a system for remediating soil contaminated by heavy metals. Its technological strength in truly resolving the problem of soil contamination by heavy metals is winning high acclaim.

SMM’s nickel hydroxide and lithium nickel oxide (LNO) are used as materials of the positive electrodes of batteries that power hybrid vehicles and idle-stop vehicles incorporating hybrid technologies. The company’s nickel hydroxide is used in Toyota Motor Corporation’s Prius, and its lithium nickel oxide in select models of that automaker’s Vitz lineup. In idle-stop vehicles, kinetic energy lost during deceleration is recovered as electric energy and stored; the engine is turned off while waiting for traffic lights, etc., and when ready to resume movement the recovered energy is used to turn the motor that starts the engine. This system aids in reducing emissions of carbon dioxide and other substances that impose a burden on the Earth’s environment. Because motor vehicles start and stop repeatedly, the batteries used to drive the motors utilized in hybrid technologies store and discharge electricity with great frequency.

The electrode materials used in these batteries therefore have to be of high quality to withstand such severe usage conditions. The electrode materials that satisfy such harsh quality demands thus provide behind-the-scenes support to reducing environmen-tal loads. SMM, applying more than 60 years of experience in nickel production technologies and precision analysis of materials, has developed and today supplies the market with nickel hydroxide meeting the quality required of materials of positive electrodes used in hybrid vehicle batteries. In addition, after further R&D the company has also launched produc-

tion of lithium nickel oxide to serve as an even more superior material with respect to storage capacity, output, service life, etc. Based on its proven strength in these two materi-als, SMM today enjoys high acclaim as a company that is able to supply materials achieving performance at the leading edge worldwide.

Products of high quality to withstand harsh usage conditions

Supporting hybrid technologies

Lithium nickel oxideSMM’s nickel products are used in the batteries mounted in hybrid vehicles, the leading response to global environmental issues. Today, in addition to mainstay nickel hydroxide, next-generation lithium nickel oxide is also underpinning hybrid technologies.

In addition to hybrid v e h i c l e s , o n e d a y rechargeable batteries using SMM materials w i l l su re l y p lay an i m p o r t a n t r o l e i n hydrogen-powered vehicles too, which are expected to become the ultimate in eco-cars.

To safeguard a clean environment, compli-ance with laws and regulations is impor-tant, of course; but upstanding morals are equally important, I t h i n k . I n s t e a d o f “Nobody’s watching,” the attitude I’d like to see embraced is “The deities are watching.”

Manager. Sumicon Certech Co., Ltd.

Tatsuya Futami

Manager, Marketing Sect.,Battery Materials Business Unit, Advanced Materials Div.

Nobuki Tsuneyama


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200

220

240

260

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330

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360

370

380(¥ million)

2000 2001 2002 2003 2004 2005 2006

Number of grants

Grant aid

The Sumitomo Foundation was founded in 1991 in commemoration of the 300th anniversary of the opening of the Besshi Copper Mine. The aim behind its establishment, which was enabled by financial donations totaling ¥20 billion provided by 20 Sumitomo Group companies, is to contribute to the betterment of human society. The Foundation’s operations consist of awarding grants to fund projects in areas including: basic science research; environmental research; protection, preservation and restora-tion of cultural properties in Japan and overseas; and research and projects in international exchange. In total, roughly ¥350 million is awarded in grants each year.

In fiscal 2006, the major projects awarded grants were as follows:

• Fundamental Study for Identifying Environmental Carcinogens Based on Tumor Gene Expression National Institute of Radiological Sciences

• Cooperation Study with University of Palangka Raya on Fate of Mercury in Kahayaan River, Kali-mantan

Toyohashi University of Technology

• Preservation of “Amida, Six Figures of Ksitigarbha and Ten Heavenly Ladies Coming to a Nun” Saijuji Temple (Ukyo-ku, Kyoto)

• Restoration of Mural Painting in Burial Chamber of Idout, Egypt Kansai University

• The Impact of Japanese Assistance on the Security of Malaysia’s Maritime Areas Universiti Kebangsaan Malaysia

Support to disaster recovery efforts

The Sumitomo Foundation

March 2007, Noto Peninsula EarthquakeDonations made through the Community Chest of Japan

April 2007, Solomon Islands EarthquakeDonation made to assist victims

“Amida, Six Figures of Ksitigarbha and Ten Heavenly Ladies Coming to a Nun”

Total grant aid and number of grants

Asahi Shimbun, March 26, 2007

Asahi Shimbun, April 4, 2007


Contributing Member of Society

Third-Party Opinion

Messages from Our Readers

View toward the 2007 Environmental Report

Reader opinions toward the 2006 Environmental Report

Environmental Reports Need to Appeal to Numerous Stakeholders through Multi-Dimensional Approaches

SMM wishes to express sincere appreciation to all readers who sent in their valuable opinions and reactions towardthe company’s 2006 Environmental Report* published in October 2006. Their views and observations have beenduly considered in preparing this year’s report. We invite readers with comments or questions concerning the 2007 report to contact us. We thank you for your interest. *Published in Japanese only

I found this year’s Environmental Report, slimmed down from last year’s (33 pages), quite easy to read, with all topics needing to be discussed written compactly. If I might make a suggestion, there were some areas in the special feature where I would want more specific information. The theme this year is living harmoniously with the environment, and often I wanted more detail: for example, concerning how idled or abandoned mines are being environmentally managed, or in what ways SMM co-exists and co-prospers together with the local people. There’s nothing wrong in writing concisely and matter-of-factly about what must be written, but insofar as the special feature goes, I would suggest that SMM should be decisive and write what it wishes to convey. I fully understand that there are difficulties due to the

limitations on number of pages. Perhaps a bit more active use could be made of the company’s website. Currently, the site merely provides PDF files of earlier Environmental Reports, and this approach makes it difficult to search for specific content and is inadequate in terms of arousing the interest of numerous stakeholders. Business corporations addressing environmental issues are no longer a novelty. Today what is therefore all the more important are the content and directions of a company’s environmental initiatives. I would like to see environmental reports (or CSR reports, as the case may be) utilized more multi-dimensionally, as a tool for setting forth the outlook on the company’s social responsibility and for proactively appealing to new stakeholders.

Age 64, Osaka　　Reading your Environmental Report gives me an overall understanding of your company. I learned what stance everyone, from top management down, is taking toward environmental issues, as well as the progress that has been made to date.

Age 74, KagoshimaI was impressed to read that all district divisions and Group companies are introducing international environmental guidelines and pursuing acquisition of international certifications.

Age 47, Akita　　First of all, I was surprised at how, in contrast to last year, environmental initiatives have gone forward several times over. I was impressed at the company’s consideration for the environment as a member of society, and I came away thinking that, judging from how it is striving to implement rectification measures and improvements, SMM is a company that knows the weight of its responsibility. I have high expectations toward future initiatives.

We thank you for reading the 2007 Environmental Report, the sixth published in Japanese but the very first made available in English. In preparing this year’s report, numerous innovations were made in order to convey SMM’s environmental initiatives more clearly and accurately. The editorial staff members pledge to continue making improvements in future issues so that the SMM Environmental Report can remain a launching pad of company information and also play an important role in interactive communication between the company and society. We eagerly invite your opinions and observations.

Editors’ Postscript Sumitomo Metal Mining Co., Ltd.11-3, Shimbashi 5-chome, Minato-ku, Tokyo 105-8716, Japan

Address inquiries to:Publicity & IR DepartmentPhone: 813-3436-7705 Fax: 813-3434-2215http://www.smm.co.jp/E/index.html


Lecturer, Dept. of Environmental & Social Studies, Faculty of Humanities, Kyoto Seika University

Yuka Tamura

Pogo Gold Mine, AlaskaAurora borealis, seen near PogoWild moose near the Pogo Gold Mine

To protect the environment, this brochure isprinted in waterless soy ink on wood-free kenaf.

11-3, Shimbashi 5-chome, Minato-ku, Tokyo 105-8716, Japan

Address inquiries to:Publicity & IR DepartmentPhone: 813-3436-7705 Fax: 813-3434-2215

http://www.smm.co.jp/E/index.html

Documents

The Hishikari Gold Mine(Kagoshima Prefecture) · Climbing Mt. Besshi To Learn about Sumitomo The ascent to Besshi Mine “Rantoba” cenotaph Distillery smokestack Mine entrance No