`
`Date:
`Attendees:
`
`
`
`
`FY2018 Business Unit IR Meeting
`(Mineral Resources, Energy, Chemical & Electronics Business Unit)
`<Summary of Q&A>
`
`May 28, 2018
`Masahiro Fujita, General Manager, Mineral Resources, Energy, Chemical &
`Electronics Business Unit
`Tsuyoshi Oikawa, General Manager, Planning & Coordination Dept., Mineral
`Resources, Energy, Chemical & Electronics Business Unit
`Kyo Onojima, General Manager, Mineral Resources Division No. 1
`Haruhiko Aritomo, General Manager, Mineral Resources Division No. 2
`Shuichi Suzuki, General Manager, Energy Division
`Yoshiyuki Sakamoto, General Manager, Basic Chemicals & Electronics Division
`Kotaro Tameda, General Manager, Life Science Division
`
`
`Investment Strategies (Upstream Assets)
`
`Q: How much are you planning to increase upstream assets in the future?
`A: Our upstream assets account for less than 10% of company total assets. Given the potential
`profitability when the market is rising, we intend to increase assets from the current level. However,
`we do not anticipate drastically increasing the overall asset weight within the company.
`
`
`Q: Which areas are you planning to invest in? Will you decrease the thermal coal assets?
`A: We are conscious that the proportion of energy assets such as crude oil and natural gas is relatively
`small within our portfolio. In terms of zinc, we would like to move forward to the next project
`following San Cristobal. As for thermal coal, we believe that it is one of our social responsibilities to
`supply thermal coal steadily to meet increasing electricity demand mainly in emerging markets. We
`will not shift away from thermal coal completely, however we are not planning to actively increase it
`in our assets.
`
`
`Q: What are your strategies for new investments? What will be your participation style?
`A:
`It is important to carefully identify projects in which we can leverage our strengths that are cost
`competitive and have tolerance to downside risks. When considering new projects, we list projects that
`meet our criteria and investigate the possibility of participation in each project. We will not simply
`chase available targets. Based on lessons in the past, we bear in mind risks in engaging in multiple
`new projects when prices are rising as well as risks in making a large amount of investments in a
`specific project. Our participation style varies depending on the project. We will decide on our level of
`involvement by considering whether or not we can leverage our accumulated know-how and expertise.
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`Biogen Exhibit 2012
`Sawai v. Biogen
`IPR2019-00789
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`Q: Will you consider the cash cost curve as a judgment criterion when replacing upstream assets?
`A: We consider the cost curve an important criterion. However, we also consider various other elements
`including the relationship with the partners, political climate, economic situation, market conditions
`and mine life.
`
`
`Individual Businesses
`Q: Can you tell us the forecast of production volume at San Cristobal in the future?
`A: San Cristobal achieved record profit in FY2017 with a record level of production volume and recovery
`rate. Profit is expected to decline by 9.0 billion yen in FY2018 compared to FY2017, which is mainly
`due to the delay of some shipments from FY2016 into FY2017 and the mining of lower ore grade
`expected in FY2018 compared to FY2017. We expect that production volume continues to decrease
`gradually after FY2019 toward the end of mining scheduled for the mid-2020s, while production
`volume is likely to fluctuate more or less depending on the grade of deposits.
`
`
`Q: Why is your outlook on production volume at Ambatovy more conservative compared to
`Sherritt?
`A: Ambatovy’s average operating rate during January-March remained at 40% due to the effect of the
`cyclone and operational constraints in sulfuric acid plant. Also, the current operating rate is around
`60% and we are expecting it to recover to 80% by ramping up sulfuric acid plant. While our outlook is
`more conservative than Sherritt, we share the view that ramping up sulfuric acid plant will take place.
`We have already identified critical issues, and by overcoming these issues we are confident that we
`will be able to achieve a high level and stable operation.
`
`
`Q: What kind of areas will you focus on specifically in the natural gas business?
`A: The importance of natural gas and LNG is expected to increase in a low-carbon society. We will aim to
`increase our market share in all fields including the upstream business, the midstream infrastructure
`business and the downstream trading business.
`
`
`Q: Can you explain the strategic rationale behind your investment in Upsher-Smith?
`A: One of the global issues in the pharmaceutical industry is the rise in medical expenses. In recent years,
`the momentum for popularization of generic drugs is increasing in Japan by government policies.
`Capturing changes in the domestic market, Summit Pharmaceuticals International Corporation has
`been increasing the volume of pharmaceutical intermediates and ingredients for generic drugs. As a
`next initiative following Japan market, we considered entering into the U.S. market, the world’s largest
`generic pharmaceutical market, with Sawai Pharmaceutical, which is our important partner in
`domestic market. We would like to expand this initiative to other countries in the future.
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`Q: Could you tell us about the current situation of Hartz?
`A:
`In recent years, the company’s earnings have been improving and we feel confident about its business.
`This is driven by the new products reflecting Unicharm’s technologies, rationalized the product
`segment and expansion of new sales channels such as pet specialty stores, e-commerce which provides
`high-end and unique products.
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`Others
`Q: Can you explain Sumitomo Corporation’s strengths in upstream strategies?
`A: One of our strengths is the business management capability. The capability is not based on how much
`assets we have but on how deeply we are involved in management and operations. For example, we
`have an experience and knowledge from San Cristobal in which we are conducting all operations
`in-house. Over the years of our involvement in the operation, we have continuously sent some of our
`young talent to the mine site to accumulate hands on operation and management experience. We
`have also been highly regarded in the mining industry for building a cooperative relationship with
`local societies.
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