Issues to Be Addressed

1.Outlook

Looking ahead, the economic environment is expected to remain unpredictable. This is due to persistently high global consumer prices against the backdrop of rising resource and energy prices caused by the situation in the Middle East, coupled with concerns over significant volatility in financial and capital markets and a cooling of domestic demand. Furthermore, the business environment surrounding the Group is undergoing major changes due to structural reforms by steel manufacturers and initiatives by both the government and private sector aimed at realizing a decarbonized society.

2.Issues to Be Addressed

To respond to the business environment surrounding the Group, we will work to improve and strengthen our corporate structure and expand our business foundation through measures such as further strengthening sales, improving productivity, reducing expenses, enhancing our Business Continuity Plan (BCP), and promoting sustainability. By doing so, we will endeavor to improve our business performance and realize a sustainable society.

Looking ahead, it will continue to fulfill its vital role of supplying raw materials to key industries while striving for sustainable growth and long-term corporate value enhancement. To that end, it will work to foster mutual prosperity with its stakeholders, including shareholders, business partners, local communities, and employees, and will continue to strengthen its corporate governance.

The Group is also proactively engaged in promoting sustainability. With the goal of achieving carbon neutrality by 2050, it is undertaking various initiatives, such as improving equipment efficiency, introducing energy-saving technologies, reforesting former mining sites, acquiring forest certification for company-owned forests, and generating electricity using renewable energy sources. It will continue to conduct business activities with a strong commitment to environmental responsibility.

Additionally, in order to maintain and enhance its competitiveness, it recognizes human resources as a vital form of capital. It is actively implementing initiatives aimed at maximizing the value of its personnel, thereby contributing to the creation of corporate value.

3.Progress of the Third Medium-Term Management Plan

The Group is currently implementing its Third Medium-Term Management Plan (the Plan) to achieve its long-term vision of "contributing to society through the development and stable supply of resources, and achieving sustainable growth by leveraging the Group's comprehensive strengths as a 'comprehensive resource company'."

Long-Term Vision and Basic Policies under Third Medium-Term Management Plan

Contributing to society through the development and stable supply of mineral resources and harnessing the collective strength of the Group as an integrated mineral resources company to achieve sustainable growth.

Long-Term Management Goal for FY2033

ROIC (return on invested capital)
7% or more

Basic Policies (For period of Third Medium Term Management Plan)

In adopting and using ROIC as a management indicator, we aim for its uptake and entrenchment down from the company to individual business segments and from individual business segments to individual business sites, as well as for improved capital efficiency
Steady progress with Arqueros Mine development and achieve start of operations
Initiatives to optimize limestone supply, centered on Torigatayama Quarry Complex
Continue initiatives to develop new markets (limestone, Polytetsu)
Secure and develop new resources, regardless of interest (major/minor) or approach (greenfield/brownfield)

Under the Plan, which covers the period from fiscal Year 2024 through 2026, we are introducing and promoting ROIC-based management. At the same time, we are advancing the securing of new resources, the development of the Arqueros mine in Chile, the optimization of our domestic limestone supply system, and the cultivation of overseas markets centered on limestone and Polytetsu. Furthermore, we are working to improve and enhance capital efficiency through measures such as reducing cross-shareholdings and acquiring treasury stock.

In fiscal 2025, the second year of the Plan, we promoted various initiatives. These included materializing plans to expand ore storage facilities to strengthen the export capacity of Torigatayama, establishing a joint venture with a local company in Taiwan for the manufacture and sale of Polytetsu, participating in the Oracle Ridge copper exploration project in the United States, and conducting surveys and studies for a geothermal power generation project in the Shiramizugoe district of Kirishima City, Kagoshima Prefecture, jointly with Electric Power Development Co., Ltd. (J-POWER).

Regarding the development of the Arqueros mine, although there have been increases in development costs and delays in the start of operations compared to the initial plan, the project, which began with initial exploration in 2011, has progressed to the final stage, with operations expected to commence around the summer of this year.

While steadily advancing these initiatives that will lead to securing and improving future earnings, we are revising our policy on reducing cross-shareholdings and conducting share buybacks to improve and enhance capital efficiency in line with ROIC-based management.

In fiscal 2026, while prioritizing the successful start of operations at the Arqueros mine, we will steadily advance our basic policies and the initiatives of each segment, as it is the final year of the Plan. Additionally, we will continue our efforts to improve and achieve the management targets set forth in the Plan, such as ROIC.

The Group respectfully asks for the continued support and cooperation of its shareholders.