Positioned for Growth

Annual Report 2013 Positioned for Growth Annual Report 2013 Year Ended March 31, 2013 Contents AN OVERALL VIEW OF THE JX GROUP 2 Management Message “The JX Group has formulated the Second Medium-Term Management Plan, and over the next three years the Group will advance to a new stage in which it will 2 start a leap forward.” 4 What We Do 6 Working to Maximize Corporate Value 8 The JX Group’s Core Businesses OVERVIEW OF FISCAL 2012 14 Financial Highlights This section provides a four-year summary of fi nancial and market data useful for checking the earnings capacity and fi nancial position of the JX Group. 16 Review of Fiscal 2012 This section introduces key topics from April 2012 to June 2013. FUTURE GROWTH STRATEGIES 18 President Matsushita Discusses the JX Group’s Vision for Growth “We will work to maximize the corporate value of the Group by continuously 18 realizing high levels of profits and ROE as well as by strengthening our risk tolerance in response to changes in the business environment.” President Isao Matsushita gives an overview of the newly formulated Second Medium-Term Energy Management Plan (FY2013–2015) and explains the Group’s Long-Term Vision for 2020. Business 32 Oil and REVIEW OF CORE BUSINESSES Natural Gas Exploration and 30 Overview of Core Businesses Production This section provides an overview of the Group’s core businesses, including operating Business 36 results, to help readers quickly obtain knowledge of each business. 32 Three Core Businesses— Metals Business Strategies under Second Medium-Term Management Plan 40 In this section, we outline growth strategies under the Second Medium-Term Manage- ment Plan (FY2013–2015). GROWTH STRATEGY DRIVERS 44 Board of Directors and Corporate Auditors 46 Corporate Governance In this section, we explain the corporate governance system of JX Holdings, with com- ments from Mr. Hiroshi Komiyama, an outside director. 53 JX Group CSR 55 R&D Activities This section introduces the JX Group’s R&D activities. FINANCIAL INFORMATION 58 Five-Year Financial Summary 60 Market Data 62 Operating Data 64 Review and Analysis of Fiscal 2012 Results This section provides an explanation of operating results and fi nancial position in fi scal 2012 from Senior Vice President Ichiro Uchijima, who is responsible for the Finance & Investor Relations Department. 69 Business and Other Risks 74 Consolidated Financial Statements and Notes 64 BASIC INFORMATION 108 Corporate Profiles / Organization Charts 112 Principal Group Companies 114 Investor Information 115 IR Website Guide Cautionary Statement regarding Forward-Looking Statements This notice contains certain forward-looking statements, how- ever, actual results may diff er materially from those refl ected in any forward-looking statement, due to various factors, including but not limited to the following: (1) macroeconomic conditions and changes in the competitive environment in the energy, resources, and materials industries; (2) changes in laws and regulations; and (3) risks related to litigation and other legal proceedings. JX Holdings, Inc. Annual Report 2013 1 Management Message Yasushi Kimura Representative Director, Chairman of the Board Isao Matsushita Representative Director, President In both name and substance, the “integration” stage for JX Holdings came to an end with the completion of the First Medium-Term Management Plan. In accordance with the recently formulated Second Medium-Term Management Plan, over the next three years the JX Group will advance to a new stage in which it will “start a leap forward.” 2 JX Holdings, Inc. Annual Report 2013 AN OVERALL VIEW OF THE JX GROUP JX THE OF VIEW OVERALL AN It has already been more than three years since the establishment of JX Holdings, Inc., in April 2010. During that time, we have faced a challenging business environment, including the damage to main worksites caused by the Great East Japan Earthquake as well as the appreciation of the yen, which at one point rose to about ¥75 to the U.S. dollar. Despite the diffi cult business environment, all the employees of the JX Group worked together to implement the First Medium- Term Management Plan. Through those united eff orts, we successfully strengthened the Company to the point where we can continuously maintain ordinary income above ¥300.0 billion. Moreover, we were able to implement capital expenditures in high-growth business fi elds that were basically in line with our plan, and as a result we have established a strong platform for future growth. From fi scal 2013, we initiated the Second Medium-Term Management Plan. Under this new plan, we have positioned the next three years as a period for making a major leap forward to become a world-leading integrated energy, resources, and materials business group. On that basis, we have formulated a strategy from three perspectives—Profi t- ability, Growth, and Flexibility. First, to enhance profi tability, the JX Group will secure steady profi ts from existing business by realizing overwhelming competitiveness through continuous restructuring and safe, stable operations. In addition, we will secure a steady return from ongoing investment projects. In this way, we are aiming for ordinary income of more than ¥400.0 billion in fi scal 2015. Next, to drive growth, the JX Group will continue to give priority to allocating management resources to highly profi table and high-growth business fi elds. Over the three years to fi scal 2015, we plan capital expenditures of ¥1,300 billion or more. Of this total, strategic investments will account for ¥830 billion or more. We will implement projects that will lead to future business growth. Finally, in regard to fl exibility, we will work to increase our risk tolerance in a business environment marked by increas- ing uncertainty. To that end, we will improve our net D/E (debt-to-equity) ratio to 0.9 times or less at the end of fi scal 2015. In addition to the Second Medium-Term Management Plan, the JX Group has also formulated the Long-Term Vision, which outlines the Group’s direction toward fi scal 2020. By realizing the goals of the Second Medium-Term Management Plan as well as by implementing further structural reforms and achieving ongoing business growth, the JX Group will raise the competitiveness of each business to a high level, not only domestically but also globally. In addition, by maintaining a balance between petroleum and non-petroleum businesses as well as a balance between upstream and midstream/downstream businesses, the JX Group will establish a stable earnings capacity that is less aff ected by changes in the business environment. We will continue to resolutely take on the challenge of becoming a world-leading integrated energy, resources, and materials business group by achieving the goals of the Second Medium-Term Management Plan and the Long-Term Vision. We would like to ask our shareholders and other stakeholders for their continued understanding and support. August 2013 Representative Director, Chairman of the Board Representative Director, President JX Holdings, Inc. Annual Report 2013 3 What We Do JX GROUP SLOGAN JX GROUP SYMBOL JX GROUP MISSION STATEMENT The JX Group will contribute to the development of a sustainable economy and society through innovation in the areas of energy, resources and materials. “JX” is a name which represents the basic philosophy of the Integrated Group. “J” represents a Japanese and world-leading “integrated energy, resources and materials group,” and “X” represents challenges to the unknown, growth and development for the future, and creativity and innovation, among other things. 4 JX Holdings, Inc. Annual Report 2013 AN OVERALL VIEW OF THE JX GROUP JX THE OF VIEW OVERALL AN ORGANIZATIONAL STRUCTURE OF THE JX GROUP The JX Group was established in 2010 through the management integration of Nippon Oil Corporation and Nippon Mining Holdings, Inc. Both of our predecessor companies had been in business for more than 100 years. Under the leadership of the holding company, JX Holdings, Inc., the Group is aiming to become a world-leading integrated energy, resources, and materials business group with three core business fields—Energy, Oil and Natural Gas Exploration and Production, and Metals. Energy Oil and Natural Gas Metals Listed subsidiaries Exploration and Production NIPPO CORPORATION, Toho Titanium Co., Ltd.*, and others Common function subsidiaries * From fi scal 2013, the operating results of Toho Titanium are included in the Metals Business. Independent business subsidiaries We are engaging in a wide range of businesses extending from upstream to downstream, centered on petroleum and copper, and will work to construct an optimal portfolio by allocating management resources to highly profi table and high-growth business fi elds. Ordinary Income Excluding Inventory Valuation Factors (FY2012) Energy Business ¥102.8 billion 37.9% ¥271.0 billion Oil and Natural Gas E&P Business ¥93.6 billion 34.5% (FY2012) Metals Business ¥46.5 billion 17.2% Listed subsidiaries and others ¥28.1 billion 10.4% JX Holdings, Inc. Annual Report 2013 5 Working to Maximize Corporate Value TARGETS OF THE JX GROUP FOR 2020 The JX Group, based on sound, transparent corporate governance, is implementing a Groupwide growth strategy and fl exible operational activities in response to changes in its business environment. In this way, the Group is aiming to become a world-leading integrated energy, resources, and materials business group. In March 2013, the JX Group announced the Second Medium-Term Management Plan and the Long-Term Vision, which spells out the Group’s targets for 2020. Specifi cally, the Long-Term Vision calls for the JX Group to become a “corporate group with business that is highly competitive by global standards” and to maintain a “business portfolio with a balance between petroleum and non-petroleum businesses and between upstream and midstream/downstream businesses.” The JX Group will strive to realize the Long-Term Vision by achieving the objectives of the Second Medium-Term Management Plan (FY2013-2015), building on the base of the results of the First Medium-Term Management Plan (FY2010-2012).

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