Sojitz Plans 30B Yen Capex for Mineral Resources Depart in F2007

Japanese major business house, Sojitz plans capital expenditure of maximum 30 billion yen for its Mineral Resources Department in fiscal 2007 ending March 2008. The department examines capex for coal, ferroalloy and nonferrous metals in addition to concreted capex of above 20 billion yen for iron ore and coal. Sojitz also thinks to expand trading business for coal, ferro-alloy and non-ferrous metals. By these capex and business expansion, the firm tries to improve profitability to gain recurring profit at more than 15 billion yen in fiscal 2010 even when mineral resource prices are adjusted.Sojitz initially planned capex of 15 billion yen for fiscal 2007 compared with 8 billion yen in fiscal 2006. The firm concreted capex of above 10 billion yen to aquire the right of Australian iron ore and general coal mines. Masahiro Komiyama, general manager of the Mineral Resources Department, said the annual capex seems to total more than 20 billion yen for scheduled plans such as the development of Australian coal mine or of Philippine nickel mine.The firm holds additional investment plans. Sojitz plans 50 billion yen capex for 3 years by fiscal 2008. The firm will concentrate the investment plans in fiscal 2007 whose performances were delay so far.The firm originally estimated recurring profit of 13 billion yen for fiscal 2007, down by 19% from a year ago. But the firm currently prospects the recurring profit could increase from originally expected thanks to the upsurge of ferroalloy market price. The firm gains additional profits by the logistics enhancement, for example, increasing Russian coal trading by 1 million tonnes to 17 million tonnes per year.Sojitz analyzes the firm owes current profits to higher material prices. The firm tries to strengthen its profitability by interest expansion in iron ore mines to 2.1 million tonnes in fiscal 2010 from current zero and coal mines to 7.5 million tonnes per year in fiscal 2009 compared with current 5 million tonnes.The firm aims to gain recurring profit of 5 billion yen for each business department in fiscal 2010, including coal division, iron ore & ferroalloy division and nonferrous & precious metal market division.