Establishing a "Materials Premium" to tackle a wide range of social issues

Foreword
I would like to start by extending our prayers and heartfelt sympathies to all of those who lost their lives in the Great East Japan Earthquake and the countless people whose lives have been devastated or turned upside down as a result.
As a comprehensive materials manufacturer whose products help underpin social infrastructure, we aim to provide people with all the basic materials they need. As a group, we also believe that we have a responsibility to help those affected by the earthquake, so that they can get back to leading safe, secure and comfortable lives as soon as possible.
We are committed to doing our very best “For People, Society and the Earth”, and are always asking ourselves how best to achieve that, so that we can contribute to the sustainable development of society as a whole on a groupwide basis.

Hiroshi Yao
President and Chief Executive Officer
Mitsubishi Materials Corporation

Q. The Mitsubishi Materials Group was also damaged by the Great East Japan Earthquake, wasn't it?

Yes, 60 of our group plants and other sites sustained damage. The Onahama Smelter & Refinery operated by Onahama Smelting & Refining Co., Ltd. in Fukushima prefecture, which is one of our main copper production facilities, was particularly badly damaged and took time to restore. We managed to restart operations at all sites however by July, including the Onahama Smelter & Refinery. I would like to extend by sincerest appreciation for all the tremendous support we received from everyone who had a hand in helping to restore operations.

Our responsibilities as a material and component manufacturer

In addition to physical damage at individual sites, the earthquake also disrupted our supply chain in some cases. As we take our duty to reliably supply our customers with a range of basic materials and components very seriously however, we worked together to procure alternative items and did everything we could to minimize any impact on our customers. The fact that we were able to continually supply our customers with products of sufficient quality, in spite of pressure on the shop floor to maintain supply levels, was also thanks to our commitment to ongoing CSR activities on a daily basis.
Although we have always taken steps to diversify supply sources for raw materials, these recent experiences have prompted us to schedule a comprehensive review of our business continuity plan (BCP), including steps to ensure human safety.

Q. So you are putting a lot of effort into support activities in the affected area?

Assisting with restoration and reconstruction as part of our core operations

Local authorities and a whole host of other people have consulted with us about restoration and reconstruction support activities for the future, including clearing rubble from the earthquake, examining and surveying damaged facilities such as bridges and ports, and decontaminating radioactive soil. We want to harness the full potential of our technology and expertise here at the Mitsubishi Materials Group to help with the reconstruction process.

Dedicated support activities and the importance of community ties

The earthquake has been a disaster on a national scale, so it’s only natural that we as a company get involved in support activities. As well as donations from Mitsubishi Materials and other group companies, we have also passed on personal donations from many of our employees. As we appreciate the need for dedicated support activities, we have also set up a new volunteer leave scheme and put in place mechanisms to assist and encourage employees engaging in voluntary activities. Working with volunteer centers in the affected area, we have continued to send a steady stream of employee volunteers to assist with restoration and reconstruction since the end of May.
I have always thought it important to instill a sense of CSR awareness in new employees while they are still fresh. I believe that getting involved in voluntary activities from a young age makes people understand how they relate to the rest of society, which in turn leads to a natural appreciation of the crucial ties between corporate management and society as a whole. That is why we have incorporated voluntary activities into our training curriculum for new recruits from fiscal 2012 onwards. As a result, the majority of our new employees have been and will be providing voluntary support for the restoration and reconstruction process via this scheme.

Q. You have launched your new Medium-Term Management Plan at a time of major social upheaval. Could you tell us a bit more about that?

Taking into account external factors such as current market trends and the changing nature of public demand, in August 2011 we launched “Materials Premium 2013—Aiming for New Value Creation,” our new medium-term management plan with a twin focus on our growth strategy and enhancing our financial position. The main aims of our growth strategy are to expand business in overseas markets, especially in emerging countries, and to establish a Materials Premium.

Expanding business in emerging markets

The world is currently undergoing some major structural changes, with developed markets being hit by downturns as emerging markets continue to grow. Expanding operations from the domestic market into overseas markets is key to our growth strategy. To expand business in emerging markets, however, it is necessary to establish our organizations and systems from new perspectives with regard to product strategy, production facilities and our approach to manufacturing, and establish a framework. With that in mind, we established the new Overseas Business Strategy Department and Corporate Marketing Department in April 2011. Personally, I believe that success in business development in an overseas market depends on getting intimately acquainted with the local markets as well as communities and forming strong partnerships, whilst at the same time contributing to the development of the relevant country through your business activities. It is also important to reinvest some of the money you make overseas back into the local area, and to assimilate the company into the local environment whilst expanding operations.

Establishing a Materials Premium

The Mitsubishi Materials Group operates as an integrated multibusiness entity covering various industries. We intend to harness our strengths—namely, our wide range of materials, our products and technologies, and our global operations, particularly in emerging markets—and take full advantage of the unique synergy generated by our integrated business to create new value. That is what we mean by Materials Premium.
Our business model in the manufacturing industry is simplicity itself, based on constantly identifying customers' needs and then developing and selling products accordingly. By reinforcing individual business processes, and integrating them to an even greater extent, our aim is to create unique value in a way that only the Mitsubishi Materials Group can.

Q. What are you hoping to achieve by integrating your resource and recycling businesses?

Establishing a resource recycling system

As Japan is not a rich country in terms of natural resource production, efforts to secure and recycle mineral resources are crucial in terms of resource security and tie in perfectly with the country's public demands. In order to propel our operations in this area even further forward, we established the Mineral Resources & Recycling Business Unit in April 2011. We decided to integrate our mineral resource and recycling businesses because we recognize that securing both natural and recycled resources is a key priority for the future. We are aiming to set out a long-term mineral resource strategy and combine all of our technologies in mineral resource operations in order to reliably secure raw materials and fuel, and to expand and reinforce our underlying ability to maintain stable supplies of our products.
Our smelting and cement recycling system, which is a prime, unique example of what we are aiming to achieve with Materials Premium, is a zero emission system that is designed to effectively utilize waste from outside sources, and to reuse byproducts from smelting plants as raw materials for cement plants, and vice versa. Looking ahead, we also intend to focus on the concept of urban mines, which involves recycling resources from existing products, and to position recycling as a key supply route for securing resources.
In spite of our determination to create a recycling-oriented society, Japan is still only halfway towards achieving that goal at the moment. If we can circulate recycled resources more effectively on a domestic basis however, we can reduce the amount of new resources that we import from overseas. This would also enable us to significantly reduce product manufacturing costs, energy consumption, and CO₂ emissions, compared to using virgin resources. We are determined to keep on emphasizing the importance of recycling to establish schemes and initiatives in the future, to help establish recycling as a fully functioning social system in Japan.

Q. As a company, you have to approach CSR from various angles, don't you?

Tackling social issues with an emphasis on long-term sustainability

As I see it, CSR is essentially a question of incorporating public demand and expectations into our business strategies and striving to resolve social issues through our core operations. With an emphasis on changes in the external environment, the interests of our stakeholders and long-term sustainability, we set out nine material issues (factors that could have a serious impact on our corporate value) in fiscal 2008, since which time we have continued to step up initiatives with the aim of contributing to the sustainability of society as a whole through our core operations.
Having come through a once-in-a-century global recession followed by a once-in-a-millennium earthquake and tsunami in Japan, our external environment has undergone some massive changes recently. In Japan after the March 11 earthquake, we are experiencing a major paradigm shift in energy issues, which has become a center of public attention. We are determined to establish a Materials Premium so that we can continue to tackle a wide range of social issues in the future.

Maintaining a global perspective

Our Metals Company, which operates one of our core lines of business, procures large quantities of raw materials from overseas. As a smelting operator that invests in and purchases ore from overseas mines, we are a member of the International Council on Mining and Metals (ICMM) and gets involved in a wide range of global issues. I had a chance to talk to the President of the ICMM when he paid us a visit in December 2010. Our conversation focused on the issue of climate change and underlined the fact that sustainability on a global scale remains a major priority. Although we are obviously committed to stepping up our own initiatives as a company, it is also crucial that we establish a presence via other industry-specific channels, so that we can help resolve global issues that affect us all.

Q. Training and harnessing human resources is listed as one of your companywide initiatives under the new Medium-Term Management Plan. Could you tell about your thinking behind that?

Taking pride in your work

I am always encouraging our employees to go about their work with confidence and to take pride in being part of a business that supplies the basic materials that underpin society. That’s what we call "Materials Pride" here at the Mitsubishi Materials Group. Specifically, it's a question of going about your work with determination and a sense of speed, based on taking the lead rather than just following in the wake of major changes in the external environment. We tell our employees to focus on self-motivated studies, and to continually aspire to do better. To encourage their self-improvement efforts, we provide all of our employees with a range of training opportunities, based on the ideas of training for all and lifelong education.
One of our top priorities is to train and secure human resources who are capable of excelling on a global scale. In addition to being able to work using English and other foreign languages, employees need to have various other skills if they are going to have a hand in global operations, including familiarity with local markets and cultures, high level management skills and specialist knowledge. In April 2010, we established the Group Training Center as a base for human resource training and launched the Mitsubishi Materials Corporate University. In addition to using these facilities to train global human resources more effectively, thereby harnessing one of our key management resources, we are also actively looking into recruiting talented human resources from overseas.

I want all of our employees to be proud of the fact that they are members of the Mitsubishi Materials Group, so that we can continue to be a company that does its bit "For People, Society and the Earth".
I would like to encourage our stakeholders to provide us with honest feedback too, so that we can continue to improve our CSR activities. I hope we can continue to rely on your support and understanding in the future.