Itochu Corp. to Expend 400 Billion Yen in Resource Assets in F2011

Itochu Corporation’s energy, metals & minerals company plans around 400 billion yen investment in fiscal 2011 started April, which is around 4 times of fiscal 2010 level. The company already realized investment in thermal coal and platinum group metals along with expansion in existing projects while the company seeks additional assets in coal, copper and energy. The company expands the assets by 60% to 2 trillion yen level in mid-term mainly by increasing interests in competitive resources assets to secure long term supply. The company improves the profitability through synergy between trade and resource investment in order to secure resources mainly for Japanese buyers.

The company invested 126.5 billion yen for Columbian coal interest, 40.9 billion yen for additional interest in Brazilian Namisa iron ore mine and 22.4 billion yen in South African PGM interests in fiscal 2011. The company plans total 200 billion yen investment for existing projects including Namisa and 200 billion yen for new investment.

The company’s investment budget is 350-450 billion yen for 2 years under the mid-term plan through fiscal 2012. The company president Ichiro Nakamura said the company tries to realize pending investments as early as possible. He indicates the company would invest additionally on the budget depending on chance for competitive assets while the company tries to realize the planned investment in line with the budget.

The company’s investment increased by 40% to 85 billion yen in fiscal 2010 from fiscal 2009. The company expended 50 billion yen for expansion in iron ore, coal and other existing projects while the company invested 35 billion yen for new projects including Uranium interest in Namibia.

The company posted 109.2 billion yen of net profit for fiscal 2010, which is 66% higher than fiscal 2009 level. The profit was second high after fiscal 2008 thanks to higher commodity price and higher profit from investment despite of impairment in energy item. Mr. Nakamura said the company targets record 150-160 billion yen of net profit for fiscal 2011 when the company can enjoy higher profit from invested resources assets despite of uncertainty in world economy.

The company is confident the annual net profit should be more than 100 billion yen stably even when commodity price would decrease due to past investment. The company seeks higher level of profitability through wider equity resources, wider trading in metals and energy and growing business in new energy.