Sumitomo Metal Mining Co Ltd

Analysis

Business Description

Sumitomo Metal Mining Co Ltd (SMM) is one of the largest non-ferrous metal and mining companies in Japan. It carries out the production, refining and smelting of metals such as copper, nickel, cobalt, silver, and gold. The company also manufactures semiconductors and advanced materials.

The company operates through four reportable segments: Mineral Resources, Smelting & Refining, Materials, and Other Businesses.

In FY2021, the company’s capital expenditure stood at JPY32,672 million.

R&D Overview

Research and development (R&D) focus on developing new material products; and core technologies such as powder synthesis and surface treatment technology, crystal growth and processing technology, smelting and refining process technology, and exploration, mining, and mineral processing technologies. Under its Materials Business segment, the company plans to develop higher performance battery cathode materials. Through its Smelting & Refining Business segment, SMM focuses on developing new processes for enabling new Ni/Coraw material utilization and enhancing ability to handle raw materials.

It operates R&D laboratories and research centers such as Ichikawa Research Center, Materials Laboratories, Mineral Resource & Hydrometallurgy Process Center, Battery Research Laboratories, and Niihama Research Laboratories. In FY2021, the company spent JPY6,229 million on R&D activities.

Business Segments
Overview

Manufactures, processes and sells semiconductor materials such as advanced materials, powder materials, battery materials and crystalline materials.

Also manufactures automotive exhaust, chemical catalysts, processing catalysts, petroleum refinery and desulfurization catalysts, and autoclaved lightweight concrete (ALC) products.

Key Stats

In FY2021, capital expenditure stood at JPY6,365 million.

Performance

Reported revenue of JPY190,039 million for FY2021, which grew 0.7% YoY, and reported a negative CAGR of 3.2% during 2019-21.

Accounted for 20.5% of the company's revenue in FY2021.

Reported operating income of JPY11,326 million in FY2021, compared to an operating income of JPY5,274 million in FY2020.

Growth in operating income was due to increase in the sales volume of powder and other materials.

Inventore veritatis
Overview

Comprises exploration and development, production, and sales of non-ferrous metal resources in Japan and overseas.

Key products include gold and silver ore, copper concentrates, copper and gold.

Has interests in Sierra Gorda copper mine, Ojos del Salado copper mine, Candelaria mine, Northparkes mine, Jinlong copper mine, Quebrada Blanca mine, Hishikari mine, Morenci copper mine and Cerro Verde copper mine.

Key Stats

In FY2021:

Sierra Gorda copper mine production: 149,000 tons (t). Cerro Verde copper mine production: 372,000 t. Morenci copper mine production: 446,000 t. Hishikari mine production: 6 t.

In FY2021, capital expenditure stood at JPY10,236 million.

Performance

Reported revenue of JPY75,688 million for FY2021, which decreased 5.3% YoY, and reported a negative CAGR of 13% during 2019-21.

Accounted for 8.2% of the company's revenue in FY2021.

Reported operating income of JPY65,290 million in FY2021, which grew 72% YoY.

Decline in revenue was due to the COVID-19 outbreak.

Increase in operating income was due to increases in gold and copper prices.

Overview

Comprises real estate businesses and technical engineering.

Performance

Reported revenue of JPY3,859 million for FY2021, which decreased 8.4% YoY, and reported a CAGR of 2.0% during 2019-21.

Accounted for 0.4% of the company's revenue in FY2021.

Reported operating loss of JPY2,758 million in FY2021, compared to an operating loss of JPY911 million in FY2020.

Overview

Includes smelting, and sale of copper, nickel, ferronickel, and zinc.

Also includes smelting and sale of precious metals such as gold, silver and platinum.

Operates Toyo smelter & refinery, Niihama nickel refinery and Harima refinery in Japan.

Key Stats

In FY2021:

Sold 442,626 t of copper (Cu), 17,170 kilograms (kg) of gold (Au), 55,861 t of electrolytic nickel, and 13,023 t of ferronickel.

In FY2021, capital expenditure stood at JPY16,071 million.

Performance

Reported revenue of JPY656,536 million for FY2021, which grew 13.4% YoY, and reported a CAGR of 4.1% during 2019-21.

Accounted for 70.9% of the company's revenue in FY2021.

Reported operating income of JPY55,816 million in FY2021, which grew 15.7% YoY.

Growth in revenue was due to increase in production levels and sales volumes of electrolytic copper.

Increase in operating income was due to increases in non-ferrous metals prices.

Geographical Segments
Inventore veritatis
Performance

Reported revenue of JPY442,895 million for FY2021, which grew 1.3% YoY, and reported a negative CAGR of 6.1% during 2019-21.

Accounted for 47.8% of the company's revenue in FY2021.

Performance

Reported revenue of JPY205,192 million for FY2021, which grew 24.6% YoY, and reported a negative CAGR of 10.7% during 2019-21.

Accounted for 22.2% of the company's revenue in FY2021.

Performance

Reported revenue of JPY154,505 million for FY2021, which decreased 11.1% YoY, and reported a CAGR of 0.6% during 2019-21.

Accounted for 16.7% of the company's revenue in FY2021.