Mitsubishi Corporation

Aluminum Business and Regional Development

Mozal S.A.R.L. Aluminum Smelting Project

MC's Aluminum Business

Aluminum ingots are produced by smelting alumina through electrolysis. Such alumina is extracted from mined bauxite by dissolving it in caustic soda. The demand for aluminum products in Japan is around four million tons annually. These aluminum products are made by using aluminum ingots as a raw material, which is processed through methods such as rolling, extrusion and casting. Aluminum is a highly recyclable metal and by using recycled aluminum, recycled aluminum ingots can be manufactured vastly more efficiently.

MC's aluminum business revolves around two major areas of activity: resources development, and trading. The resources development business involves the development of projects concerning bauxite mining, alumina refining and aluminum smelting. The trading business involves trading of aluminum ingots, aluminum products and recycled aluminum ingots. MC's involvement in the resources development business was originally sparked by the oil crises of the 1970s. The smelting process consumes enormous amounts of electricity and at the time, rising electricity prices made it difficult for aluminum smelters to conduct their operations in Japan. It was at this time that MC sought to secure overseas resource holdings for Japan's benefit. MC is presently participating in alumina refining and aluminum smelting projects in such countries as Mozambique, Australia, Brazil, Indonesia and Venezuela. MC's annual volume of aluminum ingot production is 230,000 tons-making it the largest Japanese producer of aluminum-and it continues to actively secure further resources. MC is also actively developing its bauxite business and acquired bauxite exploration rights in the Republic of Guinea in December 2005.

MC's annual trading volume of aluminum ingots is 1.6 million tons worldwide. It has trading offices in Tokyo, the United States, the United Kingdom and Thailand and conducts the majority of its transactions in Japan, the United States, and Europe. MC's trading volume of aluminum ingots in Japan is approximately 600,000 tons per year.

Overview of Mozal S.A.R.L.

In 1998, MC, the Mozambican government, global resources giant BHP Billiton Limited and the Industrial Development Corporation of South Africa Ltd, put down the foundations for Mozal S.A.R.L., an aluminum smelter joint venture in Mozambique. The project originally started out of the Mozambican government's active desire for foreign investment to help rebuild the nation in the wake of a long-lasting civil war that had just ended. At the time, the South African government had announced that it would supply Mozambique with South African electric power, hoping to spur economic independence and stability in this neighboring country. Due to such helpful external factors and the strong commitment of the interested parties, Mozal became a successful aluminum smelting project that has adopted a major role in Mozambique's reconstruction. Currently, Mozal produces and exports 560,000 tons of aluminum ingots. Aluminum smelting has since grown to become Mozambique's largest industry, accounting for 55% of the country's whole exports.

Environmental Initiatives

Mozal places utmost importance on the environment. It implements various environmental initiatives, mainly targeting the following three areas: reduction of greenhouse gas emissions, treatment of waste from spent pot linings, and wastewater treatment. Generally, electric power stations are perceived as a source of greenhouse gas emission and Mozal recognizes that it too has an important responsibility as a smelter to find long-term solutions to reduce green house gases. It is working on ways to reduce power consumption as well as other initiatives such as converting the source of fuel for anode baking furnace from heavy fuel oil to natural gas, a strategy first implemented in fiscal 2005.

Mozal is also addressing the need for adequate treatment of waste from spent pot linings. Electrolytic furnaces must be replaced after their useful life of five years expires, leaving toxic waste that results from the smelting process, which must be adequately treated. Mozal currently stores half the waste material onsite under strict and proper procedures and disposes the other half of the waste material at a nearby refuse center under government license. For the future, Mozal is investigating methods to reuse this material in new applications that render the waste material non-toxic and is conducting joint experiments with steel and cement manufacturers.

Wastewater treatment is also carefully monitored by the company. All water used in ingot production processes is kept in a reservoir located adjacent to the plant. Mozal monitors the water quality on a daily basis to ensure that fluoride and other concentration levels do not exceed the World Bank's criteria. Water must meet these strict criteria before it can be released into the nearby Matola River.

Job Creation, Education and Training

Mozal provides significant employment opportunities. It presently maintains a workforce of approximately 1,100 employees, but when you include the indirect jobs such as subcontractor employees and harbor operations, the total amount of jobs generated by the project is about 10,000.

Locally hired Mozambicans make up more than 90% of the plant's workforce. Although operations at the plant did not commence until December 2000, hiring began in 1998 with the construction of the plant. Mozal conducts extensive education and job training for all its employees in an effort to ensure high product quality. Training related to health and safety also receives a high priority at Mozal and staff are required to maximize opportunities to discuss issues with fellow colleagues and there is a smooth reporting system in place based on workplace procedures. These initiatives have earned the company a strong reputation for developing skilled employees through its education and training.

Mozal Community Development Trust

Mozal Community Development Trust

The Mozal Community Development Trust (MCDT) was launched in August 2000 for the purpose of making social contributions to local communities. It provides support in the following major areas: small business to create jobs, education and training, development of healthier environments, health education, sports culture, and community infrastructure. Examples of MCDT's efforts include the establishment of schools, the construction of medical facilities for malaria prevention and treatment and assistance towards the penetration of HIV education into society.

MCDT also supports local economic activities through the promotion of local agriculture and the commercial sales of local crafts. MCDT's administrative board, of which MC is a member, meets regularly to examine the projects it supports. Based on this examination, MCDT executes and makes necessary improvements to these projects.

The MCDT has funded around 300 projects to date, and since its establishment, it has spent in total 32 million dollars. MCDT intends to continue its contribution to the local community through the funding of such activities.