Midterm Plan 2020

Briefing
November 17, 2017

1
 Introduction

To keep moving forward as a valuable

social entity that contributes to

shareholders, customers, employees,

and local communities

2
 To achieve our vision

Pursue sustained growth

Aggressive investment
Growth fields and growth regions

Strong and flexible business base

Business portfolio that is resistant to
changes in the business environment

Solid financial base

3
Review of the current Midterm Plan (FY2015 through FY2017)
▷ Major initiatives were properly pursued
Further expansion of overseas business
Environmental Management & Recycling
- Start of operation of a landfill facility in Myanmar and a new incinerator in Singapore
Metal Processing
- Sales expansion in China and Thailand & Launch of electroplating business in Mexico
Heat Treatment
- Launch of heat treatment business in Mexico
- Expansion of heat treatment bases in India

Business expansion by entering growth markets and related fields

Electronic Materials
- Development and sales promotion of new products such as electrode materials for fuel
cells and deep-ultraviolet LED
Metal Processing
- Sales expansion of copper alloy and electroplating for smartphones and automobiles

Continual reinforcement of business competitiveness

Environmental Management & Recycling
- Start of operation of a new incinerator for treating low-contaminated PCB waste
- Promotion of commercialization of naturally contaminated soil remediation
Nonferrous Metals
- Construction of a new roaster at Akita Zinc
- Start of operation of PGM's new furnace
- Promotion of zinc mine project
Electronic Materials
- Expand production capacity and sales expansion of silver powder for solar panels 4
Midterm Plan 2020 (FY2018 through FY2020)

Strengthen the business base and

aggressively invest management
resources for further growth.

Evolve into a company equipped

with stability and growth potential.
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 Basic policies
■ Expand businesses in growth markets
Aggressively invest management resources in markets
for “automobiles,” “information and communication,”
“environment and energy” and “healthcare.”

■ Increase competitiveness of existing businesses

Enhance the earning power of existing businesses by
increasing competitiveness in the mature domestic
markets and improving the functions in the recycling and
smelting complex.
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Expand businesses in growth markets 1) Trends
▷The market in each field is expanding with changes.

Automobiles Information and communication

Gasoline vehicles IoT-related

Diesel vehicles components

Getting more sophisticated,

Transition to intelligent vehicles
smaller, and slimmer

Environment and energy Healthcare

Growing environmental Treatment at

awareness hospitals

Environmental regulations Shift to preventive medicine and

tightened globally
Shift to green energy health promotion
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Expand businesses in growth markets 2) Automobiles

▷ Launch new products targeting the evolution of vehicles

▷Increase capacity and expand sales in response to market
expansion

Copper
Increase in EV and alloy

other eco-friendly cars Launch new

products Metal-
Electro
ceramics
plating
substrates
Evolution into intelligent Application
vehicles of
magnetic
materials
Increase capacity
Increase in global Expand sales Base metals Heat
Rare metals treatment
automotive production

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 Expand businesses in growth markets 3) Information and communication

▷ Address ever-changing market needs with high-performance

products and strong development capability

Passive Alloy
components
powder
Capacitors, Sophisticated
inductors

Transducers Smaller
Infrared GaAs
Optical sensors LED substrates
Slimmer

- Smartphones Connecting
components
- Base stations Lighter
Switches, Copper
- Servers connectors alloy

Changes in needs for materials associated

with evolution of components
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Expand businesses in growth markets 4)
Environmental management and energy
Waste
Waste treatment in Southeast Asia treatment
▷ Promote expansion of existing businesses and launch
of new businesses

Launch the second landfill facility and introduce the first incinerator in Indonesia
Expand treatment of hazardous waste in Thailand (landfill/ incineration)
Launch businesses in neighbor countries

Silver powder for solar panels

Silver
▷ Maintain a large market share with quality advantage powder
and production capacity
Healthcare
Deep-
▷ Develop and commercially produce a new LED Infrared
ultraviolet
LED
designed for healthcare sensors of wearable LED
terminals and for disinfection/ sterilization equipment
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Increase competitiveness in existing businesses

● Strengthen businesses in the mature domestic markets

● Improve the functions in the recycling and smelting

complex

- Start construction and operation

of new zinc mine in Mexico
- Increase collection of materials
for recycling

- Improve treatment capabilities

Los Gatos Project in Mexico

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 Aggressive investment of management resources 1)

Investment (Total for 3 years)

(Billion Yen)
Main items
120.0 ■Environmental Management &
110.0 Recycling
- Construction of new facilities in Indonesia
100.0 - Expand waste melting and recycling
business
82.2
■Nonferrous Metals
80.0
- Construction of new zinc mine in Mexico
- Increasing ability to treat impurities in
58.4 zinc smelting
60.0
■Electronic Materials
- Facilities for mass production of new
40.0 products
■Metal Processing
- Increasing copper alloy production
20.0 capacity
■Heat Treatment
- Construction of new heat treatment
0.0 plants in India
FY2012-2014 FY2015-2017 FY2018-2020
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Aggressive investment of management resources 2)

R&D (Total for 3 years)

(Billion Yen)
25.0

20.0
20.0 Environmental
17.1 Management & Recycling

15.0 14.6 Nonferrous Metals

Electronic Materials
10.0

Metal Processing
5.0

Heat Treatment
0.0
FY2012-2014 FY2015-2017 FY2018-2020
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 Pursue sustained growth
Environmental Management & Recycling
70
Nonferrous Metals
Electronic Materials
60
Metal Processing
Heat Treatment 50.0
Ordinary Income (Billion Yen)

50 Other
42.0
40 36.5
35.0 35.0 36.5

30 27.2
23.3
20.9
20
13.8

10

0
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2020
Estimate Estimate

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 (Reference) Financial data
Midterm Plan 2020 FY2017 forecast

Ordinary income (FY2020) 50 billion yen 36.5 billion yen

Operating income (FY2020) 45 billion yen 34 billion yen
ROE (FY2020) 12% or more 11%
ROA (FY2020) 10% or more 9%
Operating CF (total for 3 years) 120 billion yen 112 billion yen
Investment (total for 3 years) 110 billion yen 82 billion yen
R&D (total for 3 years) 20 billion yen 17 billion yen

Exchange rate (Reference)

Midterm Plan 2020
and metal prices FY2017 H1 average
Exchange rate (¥/$) 115 111.1
Zinc ($/t) 2,700 2,780
Copper ($/t) 5,500 6,005
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Summary of Each Segment

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Environmental Management & Recycling
1. Business strategies
- Increase competitiveness of existing businesses to establish a position as No. 1 in Asia and
accelerate increase in market share and launch new businesses in each field and region.
- Build the foundation of new businesses that will be the next mainstay businesses in light of
global trends in environmental management.

2. Financial data
Ordinary income: 10.0 billion yen (FY2020) Operating income: 10.0 billion yen (FY2020)
Investment: 29.4 billion yen (total for 3 years) R&D: 1.4 billion yen (total for 3 years)

3. Major actions
Waste treatment: Increase cost competitiveness of low-contaminated PCB waste treatment.
Expand melting and recycling waste business.
Soil remediation: Construct new landfill facility in Japan. Promote naturally contaminated
soil remediation.
Recycling: Increase overseas collection of materials for recycling.
Strengthen metal recycling by enhancing the separation facilities.
Southeast Asia: Expand waste treatment business by constructing new facilities and
increasing treatment capacity.
New business: Promote commercialization of food waste recycling.

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Nonferrous Metals
1. Business strategies
- Strengthen the business by improving the functions in the recycling and smelting complex.

2. Financial data
Ordinary income: 15.0 billion yen (FY2020) Operating income: 10.0 billion yen (FY2020)
Investment: 40.1 billion yen (total for 3 years) R&D: 2.9 billion yen (total for 3 years)

3. Major actions
Precious metals and copper: Increase production of tin by Kosaka Smelting & Refining.
Improve treatment capabilities.
Platinum metals: Increase collection of resources by expanding overseas bases.
Improve ability to handle difficult-to-treat materials.
Zinc: Expand the annual zinc production at Akita Zinc to 220,000 tons
by increasing ability to treat impurities.
Strengthen processing plant in Thailand and expand sales in
Southeast Asia.
Resource development: Start construction and operation of new zinc mine in Mexico.

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Electronic Materials
1. Business strategies
- Launch new businesses, develop new niche/top products, and make them major sources of
earnings.
- Expand business domains further to growth markets such as automobiles and healthcare.

2. Financial data
Ordinary income: 10.5 billion yen (FY2020) Operating income: 10.0 billion yen (FY2020)
Investment: 11.6 billion yen (total for 3 years) R&D: 12.3 billion yen (total for 3 years)

3. Major actions
Semiconductors: Develop and mass produce LEDs for healthcare businesses.
Electronic materials: Maintain a high market share of silver powder for solar panels.
Advanced fine materials: Increase market shares and production capacity for recording
materials, carrier powder, and ferrite powder.
New development: Expand sales of deep-ultraviolet LED for healthcare/ disinfection
and increase line of conductive materials.
Commercialize new magnetic materials for automobiles.

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Metal Processing
1. Business strategies
- Expand businesses by focusing efforts on automobiles and IoT-related fields.
- Increase earning potential further by establishing the business base that is resistant to
changes in the business environment.

2. Financial data
Ordinary income: 9.0 billion yen (FY2020) Operating income: 9.0 billion yen (FY2020)
Investment: 17.7 billion yen (total for 3 years) R&D: 2.5 billion yen (total for 3 years)

3. Major actions
Copper rolled products:
Electroplating:
Metal-ceramics substrates:
Increase production and expand sales of copper alloys to meet
growing demand for electric vehicles, intelligent vehicles, and IoT.
Enhance the processing businesses in China, Thailand and
Taiwan.
Establish a plant in Mexico. Improve competitiveness by
optimizing lines of a plant in Japan.
Expand sales of substrates for trains and automobiles as well as
industrial machinery and develop new products.

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Heat Treatment
1. Business strategies
- Increase revenues further by taking advantage of the strengths of the current business model.
- Pursue initiatives in new business domains.

2. Financial data
Ordinary income: 4.0 billion yen (FY2020) Operating income: 4.0 billion yen (FY2020)
Investment: 8.7 billion yen (total for 3 years) R&D: 0.9 billion yen (total for 3 years)

3. Major actions
Industrial furnaces: Boost sales of new furnaces in India and North America.
Enhance the manufacturing network in Japan, India, and China.
Expand furnace maintenance business and develop new products.
Heat treatment processing: Increase domestic capacity and establish new plants in India to
meet growing demand for automobile-related products.
Increase the capacity of plants in Thailand and Indonesia.
Promote automation and labor-saving at plants in Japan.

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*The earnings forecasts and other forward-looking statements in these
materials are based on information currently available at this time and on
certain premises that the Company assumes to be reasonable. Actual
performance may differ materially from such forecasts due to a variety of
factors.

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