Carajas iron ore mine in Brazil

Mitsui & Co., Ltd. (Mitsui), has played an important role in developing overseas sources of iron ore. These activities began in the 1960s with major iron ore mining projects in Australia. As part of Mitsui's strategy for attaining sustainable growth in the long term, it is allocating financial and human re-sources to its core businesses, which include the development of iron ore and other raw material resources. In line with this strategy, Mitsui has recently taken major steps to strengthen its position in the global iron ore business through the acquisition of shares in Valepar S.A. (Valepar), the holding company of Brazil's Companhia Vale do Rio Doce (CVRD), the world's largest iron ore supplier.

Conceição iron ore mine in Brazil

Initially, Mitsui's efforts to develop iron ore resources began in the 1960s, when Japan's steel industry was undergoing rapid expansion. On a crude steel output basis, Japanese steel companies expanded their output from about 22 million tons in 1960 to approximately 119 million tons in 1973, or by nearly 100 million tons over a period of only about 13 years. Growth of this magnitude generated massive increases in requirements for iron ore and other raw materials. Since Japan's natural resources were inadequate to meet this rising demand, Mitsui devoted its efforts to developing the needed sources over-seas. Mitsui played an essential role in organizing and executing iron ore resource development projects to meet the needs of Japan's steel industry, including supplying necessary funding for project development and arranging for stable supplies of raw materials on long-term contracts.

While mergers and integrations have progressed over the world's iron ore mining sector�Ewith CVRD, Rio Tinto, and BHP Billiton now accounting for two-thirds of the world iron ore trade-Mitsui's role in providing long-term and stable supplies of iron ore through the development of resources with leading international mining companies has become increasingly significant over the years. As a result of Mitsui's efforts, joint ventures with these three giants of the mining industry, Mitsui ranks number four globally in terms of equity-based iron ore shipping tonnage. Also, because of its wide range of other business links with steelmakers, Mitsui today occupies a unique position in this sector.

In addition to iron ore development projects in Australia and elsewhere dating from the 1960s, Mitsui made an equity investment and provided financing for the MBR Iron Ore Project in Brazil in 1973, as part of a consortium of Japanese steelmakers and other trading companies. In 1986, Mitsui made a direct investment in MBR, which, as the second largest exporter of iron ore in Brazil, has some of the largest re-serves in the world. Then, in 1997 Mitsui acquired 40% of CAEMI Mineraçao e Metalurgia S.A. (CMM), which is the parent company of MBR.

An important point to note is Mitsui has made well-timed investments when the opportunities presented themselves. This strategy of making investments in suppliers and gaining their trust is the same approach Mitsui has adopted from the 1960s to the present.

Mitsui's strong relationships with CVRD today date back to Mitsui's decision to own CMM on a 50-50 basis with CVRD in December 2001.

Shoei Utsuda Mitsui's President
and Chief Executive Officer
(above, far right) on a tour of CVRD's Carajas mine in Brazil

CVRD's Carajas mine in Brazil

The Strategic Alliance Agreement signed by Mitsui and CVRD in April 2002 has officially opened the way for expansion of Mitsui's relationship with CVRD beyond iron ore supply to include a broad spectrum of other business areas. Under this agreement, Mitsui is stepping up its activities to make its Comprehensive Business Engineering services available to CVRD to contribute to its expansion. In fact, a range of new business opportunities have already emerged. These are described in detail on pages 5 and 6 of this issue of Mitsui & Co.in ACTION and include sales of mining machinery to CVRD, providing railway cars sourced in China for iron ore transport, and the formation of a joint venture for coastal container transport and logistics.

For example, in addition to iron ore, CVRD is active in developing other raw material resources, including bauxite (the raw material for alumina and aluminum), manganese ore, ferro-alloys, kaolin (used in the manufacturing of paper), and copper. Other fields where CVRD is active include the railway and shipping industries as well as electric power generation. Mitsui and CVRD, for example, are examining how they can pool their capabilities to improve logistics systems in Brazil. As the activities of CVRD extend well be-yond being a mining resource conglomerate, Mitsui's relationship with CVRD offers many areas for further development, including dealing with environmental issues and supplying mining equipment and other machinery as well as providing finance for related projects.

To manage Mitsui's broad-ranging business relationships with other companies, such as CVRD, Mitsui instituted its Client Officer System in June 2002. The objectives of this system are to promote more customer-centric cooperation across Mitsui's Business Units and Divisions, and maximize the efficiency and quality of its services to major companies served by its various Business Units and Divisions, by centralizing relevant information and coordinating the business activities of various Divisions under Client Officers. The Client Officer for CVRD is Katsuto Momii, Senior Executive Managing Officer, who is shown with CVRD trainees in the photograph below.

Within the framework of this Client Officer System, the CVRD Team within Mitsui Brasileira Importação e Exportação S.A. (Mitsui Brazil) uses its on-the-spot presence in Brazil to play a major role not only in the development of the iron ore business but also in expanding the scope of Mitsui/CVRD business activities. Strengths of Mitsui Brazil include the ability to act as the working level supervisor by maintaining contact with CVRD locally, following the results of ongoing activities, and sharing information not only vertically by product areas but also on a cross-divisional basis. Within Brazil, the General Manager of the Rio de Janeiro Branch plays an important role because he has access to all communications between CVRD and Mitsui and can act as overall account manager. At the same time, the Client Officer acts as Mitsui's overall supervisor for CVRD-related projects. This system allows for a more CVRD-centered approach and makes it possible to develop, implement, and verify the most effective approaches from the points of view of CVRD and Mitsui.

The strategic alliance agreement between Mitsui and CVRD is expected to continue to make an important contribution to the sustainable development of both alliance partners.

The posted information is as of the date of issuance. The information may change without notification.