Mineral Resources,Energy,Chemical

Mineral Resources, Energy, Chemical & Electronics Business Unit What We Aim to Be and Growth Strategies

May 28, 2018

I Business Unit Overview

II Business Unit Growth Strategies

III Financial Results

I Business Unit Overview

II Business Unit Growth Strategies

III Financial Results

Mineral Resources, Energy, Chemical & Electronics Business Unit

Planning & Coordination Dept., Project Management Dept. for Mineral Resources, Energy, Mining & E&P Chemical & Electronics Business Unit

Mineral Resources Mineral Resources Energy Division Division No. 1 Division No. 2 ▪ Copper, gold ▪ Coal, uranium ▪ Crude oil, natural gas ▪ Nickel, cobalt ▪ Iron ore, manganese ▪ Petroleum products ▪ Silver, zinc, lead ▪ Carbon products ▪ LNG, LPG

Basic Chemicals & Life Science Division Electronics Division ▪ Petrochemicals ▪ Pharmaceuticals ▪ Inorganic chemicals ▪ Cosmetics ▪ Performance chemicals ▪ Crop protection products ▪ Semiconductor materials ▪ Fertilizers ▪ EMS business ▪ Animal drugs

Pogo Norwegian North Sea Oil and Gas Field

U.K. North Sea Oil and Gas Field West Mynkuduk Marcellus Shale (APPAK) Morenci LPG business (Enessance, Gyxis) FPSO Chartering Chubu Coal Center PSE, in Ghana Cove point Rasgas Tangguh Tizapa

Cerro Verde MUSA Ferroalloy Manufacturing Ambatovy in Malaysia Sakura Hail Creek Clermont San Cristobal Oaky Creek Sierra Gorda Assmang Northparkes Rolleston Wandoan [Upstream interests] Candelaria/ Copper Iron ore Nickel Uranium Ojos del Sarado Coal Crude oil, gas Gold Silver, lead, zinc (including LNG) [Midstream and downstream projects] 5 © 2018 Sumitomo Corporation Chemicals Field: Business Portfolio

Locations of subsidiaries and associated companies

Sumitomo Shoji Chemicals Co.,Ltd. Sumitronics Corporation Summit Pharmaceuticals International Corporation Summit Agro International Ltd. Summit Agri-Business Corporation

Crop Protection Product Global Distribution Network

[Basic Chemicals & Electronics Division]

Petrochemicals Inorganic and Electronics performance chemicals 1 (Sumitronics Group) [Life Science Division] Pharmaceuticals and Crop protection Fertilizers Veterinary drugs cosmetics products 6 © 2018 Sumitomo Corporation Today’s Agenda

I Business Unit Overview

II Business Unit Growth Strategies

III Financial Results

Business Unit Targets

 Mineral Resources and Energy Field We aim to fulfill stable products and services supply to industry while developing an upstream and mid-downstream combined portfolio that has significant upside potential with manageable downside risk, avoids concentration risk and yields earnings in a medium- to long-term perspective.

 Chemicals Field We aim to provide differentiated, highly profitable and value-added services and raw materials in growing industries.

Growth Strategies

The global macro trends change the demand-supply mineral resources, energy and food, and the industrial structure of IoT. Considering those changes, we aim to accomplish following material issues: Achieving harmony with the global environment; Contributing to the development of local communities and industries; and Establishing a foundation for comfortable and enriching lifestyles.

Our VISION for the Mineral Resources and Energy Upstream Business

To develop a strong asset portfolio with significant upside potential and manageable downside risk by acquiring cost-competitive assets based on a long-term view supported by supply-demand dynamics

Upside potential Manageable downside risk  Higher profitability than that of the company-wide average  Minimize downside risks through sound portfolio management  Significant earning power during favorable market periods  Capture competitive assets well positioned in the cost curve

Basic policy for strengthening upside potential and tolerance to downside risks

 Acquire cost-competitive resources that have the upside potential to increase resources base  Develop an asset portfolio that mitigates concentration in particular risks (i) products, (ii) country of project, (iii) project participation phase, (iv) project size, (v) number of projects, (vi) investment timing, (vii) liquidity, (viii) investment format (including partnership)

Strategic Initiatives in BBBO2017

 Achieve stable operation and profitability in our large-scale development projects

(Ambatovy, Sierra Gorda, etc.)

 Strengthen cost competitiveness for all producing assets

(San Cristobal, MUSA, etc.)

 Asset replacement (significant progress in divestments)

• New investment: Expansion of Tangguh LNG project in Indonesia • Asset reduction: Coal assets in Australia (Isaac Plains etc.) Batu Hijau copper and gold mine project in Indonesia Tight oil development project in the U.S., etc. Enhancement of quality of portfolio quality Enhancement of

“Strengthened our Asset Portfolio” but also resulted in “Downsizing our Asset Base”

Strategic Initiatives in BBBO2017

 Knowledge  Reinforce risk management functions management • Formulation of new portfolio management policy • Implementing periodic monitoring of asset portfolio  Enhancing technical expertise

• Establishment of new  Prioritization of Commodity Groups organization focused on upstream portfolio • Generation of long-term supply-demand outlooks and price decks (Market View) • Prepare “Playbook” and • Select products based on Market View, opportunities enhance training (project short list) and portfolio analysis program upstream businesses Measures toward redeveloping Measures toward

“Development of systems “Reinforcement of to support sustainable growth” core capabilities”

Under Current Medium-Term Management Plan

 Achieve operational stability and profitability in existing large-scale development projects (Ambatovy, Sierra Gorda, etc.)

 Acquire new cost competitive resources from a medium to long-term perspective • Proactively seek to acquire cost competitive assets in prioritized commodity groups (Taking into account “mega trends”) • Seek and acquire projects by leveraging our strengths (partners, operation management capability, etc.) • Mitigate concentration on specific projects and regions

 Continuously enhance systems and strengthen capabilities

“Roadmap towards our VISION”

Growth phase Others Lithium, etc. Lithium, Thermal coal etc. Copper Thermal Iron ore Thermal coal Copper coal Copper Iron Iron What We Aim ore By end of current Nickel to Be ore Current Medium-Term 0.8 trillion yen Zinc Management Plan Zinc Zinc (Forecast) Nickel Acquisition Acquisition of Nickel of Coking coal Natural Natural Low-Cost Natural Low-Cost Crude oil gas gas Coking Resources gas Resources Crude oil Coking coal coal Crude oil Consider country, project size, project stage, etc. 12 © 2018 Sumitomo Corporation Ambatovy Nickel Project

 Products: Nickel, Cobalt  Country: Madagascar  Shareholder composition: Sumitomo Corporation: 47.7％, Sherritt: 12％, KORES: 40.3％

• September 2015: Achieved financial completion under the project finance contract  In terms of operation, 90-day average nickel metal production achieved over 90% of full capacity.

• August 2016: Reached agreement with the lenders on the deferral of principal repayments  Mitigated financial concerns. Concentration on operational improvements.

• January 2018: Completed the sponsor structural change, Sumitomo Corporation became the largest shareholder

[Future initiatives]  Focus on stabilizing operation at a high level and further cost reduction  Continue to provide support to the project as the largest shareholder

 Products: Copper, Molybdenum, Gold  Country: Chile  Shareholder composition: Sumitomo Corporation: 13.5％, KGHM: 55％, Sumitomo Metal Mining: 31.5％

June 2015: Commenced commercial production.

[Current initiatives]  Reduce cost and increase production.  Increase throughput with minimum additional CAPEX (debottlenecking plan).

San Cristobal MUSA  Products: Lead, zinc, silver  Product: Iron ore  Country: Bolivia  Country: Brazil  Shareholder composition:  Shareholder composition: Sumitomo Corporation: 100％ Sumitomo Corporation: 30％, Usiminas: 70％

2017: Achieved record profits July 2017: Settlement of arbitration with the port (27.8 billion yen) September 2017: Resumed exports

[Future initiatives] [Future initiatives] • Feasibility Study for Phase II expansion • Continue to work on project management and to increase value of this asset, while also taking the life of mine into consideration.

Coal project in Australia Shale gas project in the U.S.  Products: Coking coal, thermal coal  Products: Natural gas, NGL  Country: Australia  Country: U.S.  Major partner : Glencore  Major partner : Rex Energy Corporation August 2010: Participated in the project

[Future initiatives] [Future initiatives] • Acquire prime assets • Since almost all lease has been maintenanced, will promote the development through monitoring the trends of gas prices • Continuous cost reduction and improvement of productivity through the optimization of development

Growth Strategies

 In the midstream and downstream fields, we will strengthen the value chain with upstream fields, and create value-added businesses utilizing derivative functions, etc. In addition to expand existing businesses, we will aim to develop new business models.

Major Initiatives

Mineral • Trading of nonferrous metals (copper, nickel, rare metals, zinc, lead, etc.) Resources Division No. 1 • Commodity trading (derivatives, physical precious metals)

Mineral • Manganese Alloy Project (SAKURA) Resources • Trading of carbon materials and products (needle coke, electrodes, carbon Division No. 2 fiber reinforced plastic [CFRP], etc.)

• U.S. LNG export project • LNG bunkering project Energy Division • LPG project: Gyxis/Enessance • FPSO owning and chartering project

 Products: Manganese ferroalloys  Country: Malaysia  Shareholder composition: Sumitomo Corporation: 26.64%, Assmang: 54.36%, China Steel: 19% Expand business with Assmang into manufacturing fields — Development of value chain —

November 2013: Commenced construction May 2016: Commenced production March 2017: Achieved full production

Worldwide trading

Manganese ferroalloys Assmang SAKURA Manganese ore

In 2014, Sumitomo Corporation established ST Cove Point LLC jointly with Tokyo Gas. Sumitomo Corporation’s first LNG project in which we will engage in natural gas liquefaction and sales for the next 20 years.

 Shareholder composition: Sumitomo Corporation: 51％, Tokyo Gas: 49％ December 2012: Singed a Terminal Service Agreement with Dominion for the liquefaction service April 2013: Entered into Heads of Agreement for LNG sales and purchase April 2018: Commenced commercial operation

SC group procures natural gas and Tokyo Gas tolling service for liquefaction Kansai Electric

Procurement Dominion of natural gas Cove Point LNG terminal

Liquefied natural gas (LNG) Natural Gas trading in Europe (Horizontal business expansion)

Gyxis  Stable supply mainly from the Middle East and U.S., by using its own chartered vessels. (Importing)  Global trading by leveraging importing flow into Japan.

Enessance  Direct-sales customers: 280k, that rank in top 10 as LPG retailers in Japan. (Retailing)  Promotion of electricity sales and house renovation business along with LPG business.

Gyxis’s import terminals Enessance’s trading zones

Gyxis Enessance

Importing / Trading Storage Wholesale Filling/transportation Retail sales

20 © 2018 Sumitomo Corporation Promotion of New Businesses LNG Bunkering Project FPSO Owning and Chartering Project  Activities: LNG supply to LNG fueled vessels  Products: Crude oil, Natural gas  Operations site: Japan (Tokyo Bay)  Operations site: Offshore Ghana  Major partners: Uyeno Transtech, ● Major partners: Yinson Holdings BHD(Yinson), Yokohama-Kawasaki JGC Corporation, International Port Kawasaki Kisen Kaisha, Ltd., Development Bank of Japan Work on the development of LNG April 2018 : bunkering business looking ahead of Yinson and Sumitomo Corporation entered into the regulations on sulfur oxide emissions Memorandum of Understanding for collaboration in to be tightened for all ocean areas starting FPSO and FSO business. from 2020 [Future initiatives] [Future initiatives] • The domestic supply of natural gas from • Joint discussion with partners with regard FPSO is expected to commence in Ghana to deploy LNG bunkering vessel within 2018. • Marketing toward securing LNG bunker • Sumitomo Corporation will roll out FPSO demand and FSO Business in other regions with Yinson.

Inorganic and Performance Petrochemicals Chemicals Electronics • Raw materials for glass • Petrochemical raw materials (Soda ash, etc.) • Semiconductor materials (Olefin, etc.) • Sulfuric acid, slag • LED chips • Petrochemical products • High purity quartz • EMS business (Phenol, etc.) • Performance chemicals (PCB Assembly business) • Plastics, synthetic rubber (Battery materials, etc.) Interacid (Switzerland) Russian Quartz Morita New Energy Materials Sumitomo Shoji Interacid (Stockton) STX Shanghai Chemicals Interacid (Tampa) STX (Sumitronics) STX Thailand STX USA CEPSA Chemical Shanghai STX Taiwan STX Mexico STX Shenzhen/Hong Kong STX Manufacturing Cambodia STX Philippines STX Asia Interacid (Chile) STX Indonesia

Growth Strategies

 With the aim of “contributing to the development of local communities and industries” and “establishing a foundation for comfortable and enriching lifestyles,” we will provide highly value-added services and raw materials.  We will strive to expand our global earnings base by boosting the joint structure of trading and manufacturing businesses and take on challenges to develop new businesses that will lead to the achievement of rapid growth.

Major Initiatives

• Accelerate the growth of the phenol manufacturing business in China and expand Petrochemicals revenue from trading of peripheral core products • Promote the engineering plastics manufacturing business jointly with KURARAY and PTTGC in Thailand

Inorganic and • Enhance the sulfuric acid tank terminal business (U.S. and Chile) performance chemicals • Expand the business for lithium-ion battery materials

• Expand trade of semiconductor and electronics material business Electronics and develop next-generation automotive electronics business • Strengthen the earnings base of EMS business by Sumitronics Group

Sumitronics Group U.S. Joint venture PCBA factory Shanghai Japan Assembly of finished products Shenzhen PCB Assembly Office automation Mexico Taiwan equipment Vehicle installation Hong Kong Home appliances Industrial equipment Thailand Philippines Cambodia ICT Medical equipment Singapore

Expansion of manufacturing platform Indonesia

EMS (Electronics Manufacturing Service) business

Customer Material Planning and PCB Design procurement Box Build After Service Development Assembly

 Robotization for productivity improvement  Business expansion to other regions following Cambodia “CIMS” production facility  Expansion of value chain to resin molding business, etc. management system 24 © 2018 Sumitomo Corporation Initiatives by Life Science Division

Medical Science AgriScience Crop Science Animal Health Science • Crop protection products • Pharmaceuticals, • Seeds and other agricultural • Fertilizers • Veterinary drugs generic medicine materials • Agricultural input & service (for livestock and •Cosmetics • Agricultural input & service business companion animal) business

Sumi Agro Europe Group (9 countries) Summit Pharmaceuticals (Shanghai) + Sipcam Alliance (8 countries in Upsher-Smith Southern Europe and Western Europe) C&O Presperse Summit Fertilizers (Qingdao, Foshan) Summit Pharmaceuticals S.A. USA S.A. China Europe Hartz Sinder Alcedo Piedmont S.A.Turkey Summit Pharmaceuticals International Summit Agro International Cosmotec Summit Agri-Business Agro Amazonia S.A. Mexico Iharabras S.A. Vietnam S.A. India S.A. South America (4 countries) Union Harvest PT. Fumakilla Indonesia Sipcam Australia Summit Rural WA S.A. Argentina Philagro

Crop Protection Product Global Distribution Network (33 countires)

Growth Strategies

 We will contribute to the goal of “establishing a foundation for comfortable and enriching lifestyles” by ensuring the stable supply of safe and reliable food and promoting mental and physical health in the life science fields.  We will aim to realize the No. 1 position as a trading company that possesses highly specialized expertise and a solid business foundation. Major Initiatives

• Enhance the value of generic pharmaceutical business in the U.S. Pharmaceutical (Upsher-Smith Laboratories, LLC) and cosmetics • Expand global operation of the cosmetics business

• Expand the agricultural input & service business Crop protection (new businesses in Ukraine, Brazil, etc.) products and • Further strengthen distribution network for crop protection products and fertilizers fertilizers • Promote IoT-based precision agriculture (use of agricultural drones, etc.)

• Expand global operation of veterinary drugs Veterinary • Promote biological business for livestock in China drugs • Develop and promote companion animal drugs in U.S.

China U.S. For livestock For pets Japan Japanese Animal drug manufacturer For livestock and pets

(EC website specializing in pets)

Global veterinary drug market (for pets and livestock): Approx.A 3.5 trillion yen Achieved annual growth of 4.5% (past 10 years)

Global expansion of veterinary drug business (More than 30 countries around the world including Africa, South America, Southeast Asia, etc.)

M ＜Eco friendly＞＜Battery related（EV etc.）＞＜Energy-saving material＞ i ◆Considering hydrogen production n by using renewable energy ◆Production of nickel/cobalt ◆Consider investment in E e by Ambatovy project carbon fiber composite n r ◆Considering utilization of brown coal material business e a carbonization and hydrogen r l (by-product) g ◆Considering investment in ◆Utilization of carbon fiber for y R lithium project weight saving of e ◆Expansion of gas business dump truckʼs bed F s through LNG i o that is core of ◆Pioneering a new market of e u low-carbon energy needle cokes using for anode l r material of lithium-ion battery d c Mining area of brown coal e s ＆ Macro trend(Population growth・Increase in income・Urbanization) Shortage of Mineral Shortage Global IoT Mega trend resouces & energy of food warming etc.

C h /Energy-saving material> precision agriculture> e  Expand businesses of silicon wafer made  Manufacturing electrolytes for m by SUMCO and silicon carbide wafer lithium-ion batteries by Morita  Overseas development of i made by Cree New Energy Materials smart wearable device for c cattle monitoring and  Expand trade a  Invest in manufacturing business of agricultural drone l engineering plastics businesses of s jointly with Kuraray and binder for positive PTTGC in Thailand electrode F material made i  Consider the participation by Kureha e in rubber compounding l Special drum business in the U.S. for Engineering plastics d containers of LiPF6 Smart wearable Agricultural automotive applications by Kuraray device for cattle drone

Engineering plastics manufacturing business in Thailand  Products: Engineering plastics (butadiene derivatives)  Country: Thailand  Shareholder composition: Sumitomo Corporation: 13.3%, Kuraray Co., Ltd: 53.3%, PTT Global Chemical Public Company Ltd. (PTTGC): 33.4%

High heat-resistant Thermoplastic elastomers “Manufacturing” in a global niche market polyamide resins Major uses

KURARAY PTTGC Sumitomo Shoji Automotive parts Chemicals • High level technical skills • Stable supply of major • Sales and marketing raw material (Butadiene) know-how • Manufacturing operation

Sumitomo Corporation Business synergies • Product marketing through effective use of global trading network Electrical and electronic Sumitoronics (Sales of products and procurement of parts Group auxiliary raw materials)

Creation of new values

Carbon-free production of hydrogen by electrolyzing water using power generated from renewable sources

Will consider carbon-free hydrogen production business by using renewable energy (mainly wind and solar power)for electrolyzing water, both inside and outside Japan. Will contribute to developing a post-carbon energy system by cultivating demand and using such carbon-free hydrogen for regional energy management, and as fuel in household, industrial and transportation sectors.

Development of Hydrogen business with unused natural resources such as Brown coal, combined with CCUS

To study the development of Hydrogen business through the utilization of unused resources such as Brown coal, combined with CCUS technology, to help achieve a carbon neutral world.

Brown Coal: low grade, high moisture coal. CCUS: Carbon Dioxide Capture, Utilization and Storage. (CO2 capture, reuse and storage technology) Brown coal mining site

I Business Unit Overview

II Business Unit Growth Strategies

III Financial Results

 BBBO2017  Medium-Term Management Plan 2020 Mineral Resources and Energy: Stabilization of operations and Mineral Resources and Energy: Enhancement of cost reduction of existing upstream projects profitability of existing businesses and Chemicals: Development of profit foundation toward a new investment in upstream projects growth stage Chemicals: Solid growth  Regained position as one of the main pillars of Sumitomo  Plot growth strategies toward FY2020 Corporation’s businesses

(100 million yen) • Strong results of • Decline in profits from 1,100 San Cristobal and iron ore San Cristobal mining project in South Africa • Reactionary effect of one-off • Growth in the chemicals field profits/losses in FY2017 900 785 Chemicals化学品 700 185 660 Mineral資源・エネルギー Resources and Energy 500

300 -66 600 -1,516 100 161 49 -1,565 ▲ -100100 -227

▲-1,600300 2015年度FY2015 2016年度FY2016 2017年度FY2017 2018年度FY2018 2019年度FY2019 2020年度FY2020 Medium-Term Management Plan BBBO2017BBBO2017 BBBO2020 2020

 BBBO2017 Mineral Resources and Energy: Divestiture took precedence Chemicals: Invested in the generic medicine business in the U.S.  Medium-Term Management Plan 2020 Will make new investments based on growth strategies both in mineral resources field and the chemicals field

(Trillion yen) 2.0 Chemicals化学品 Changes in Total Assets

Mineral資源・エネルギー Resources and Energy

1.5 0.3 0.3 0.3 0.3 1.0

1.4 1.2 0.5 1.0 1.1

0.0 FY20141234567FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Medium-Term Management BBBO2017 Plan 2020 © 2018 Sumitomo Corporation Note: Segment basis 33 Ambatovy nickel project Achieving Harmony with the Global Environment

Phenol production business in China Iron ore mining project in South Africa

Contributing to the Establishing a Foundation Development of Local for Comfortable and Communities and Industries Enriching Lifestyles