With surging demand in China for salt for use in the chlor-alkali industry placing greater pressure on salt supply, Mitsui and Co. took two decisive steps forward, making Shark Bay Salt Joint Venture a wholly owned subsidiary in 2005 and acquiring Onslow Salt Pty Ltd. in 2006. Through efficient, unified management of the two salt fields, Mitsui will strengthen its position as a stable, comprehensive supplier of salt to the chlor-alkali and food manufacturing industries, and actively develop its salt business in Asia.

The world of salt extends far beyond the saltshaker on your table or salt's traditional use as a preservative in food processing. In Japan, for instance, table salt and salt for food manufacturing and so forth account for only around 20% of salt use, with the remaining around 80% being used as a raw material for production of caustic soda, chlorine and soda ash in the chlor-alkali industry.
The diverse end uses of caustic soda, chlorine and soda ash indicate just how prevalent and essential salt is in our lives. Caustic soda is used in the manufacture of pulp and paper, textiles, soaps and detergents; chlorine's applications include the extremely versatile polyurethane plastics used in automobile components, PVC (polyvinyl chloride) employed as a building material, water purification and as a disinfectant; and soda ash is used most commonly in the production of glass.
SInce salt is a raw material for many commodities, demand for it is closely tied to economic growth and performance. In China, rapid economic development and the emergence of Chinese chlor-alkali manufacturers has led to soaring demand for industrial-use salt, to the extent that in 2004 China shifted from being a net exporter to a net importer of salt. As a result of such rising demand for salt in China, supply has become tight in Asia.

Mitsui decided to invest in Shark Bay Salt Joint Venture, a solar marine salt field in Western Australia, in 1973. For more than 30 years Mitsui accumulated experience in the operation of a major salt field and expanded sales channels to Japan and other Asian countries such as Malaysia, Taiwan and Indonesia. Then, against the backdrop of new pressures on the supply-demand balance, in the course of two years Mitsui took two major steps forward, in effect becoming a comprehensive manufacturer and supplier.
First, on February 14, 2005, Mitsui increased its holding in Shark Bay Salt to 100%. Having 100% ownership is important-and unique among major salt operations-as it affords Mitsui the flexibility to make the necessary investments in areas such as upgrading facilities to achieve more efficient production.
Then, on July 31, 2006, Mitsui purchased the entire interest of around 90% held by Dutch company Akzo Nobel N.V. in Onslow Salt Pty Ltd., which operates a solar marine salt field in Western Australia. The acquisition of Onslow salt field, which has an annual production capacity of 2.5 million tons, combined with Shark Bay salt field's annual production capacity of 1.3 million tons, gives Mitsui management control over a total annual production capacity of 3.8 million tons, making it the third-largest salt supplier in the Asian market.

Situated around 830 kilometers north of Perth in the Shark Bay World Heritage area, the 7,000-hectare Shark Bay salt field may be in the perfect environment for harvesting "crystal clear" solar marine salt. The fiercely protected, pristine seawater from which the salt is derived, extremely low rainfall and the strong Australian sun are certainly major natural advantages. These are further complemented by mature, skilled employees who stay in the job much longer than the industry average due to the excellent working conditions and on-site facilities provided, which include an elementary school and a junior high school for employees' children.
Mitsui's policy is to increase sales of Shark Bay salt to the food production market in Japan, where it can show its distinctive strengths. Shark Bay Salt's salt harvesting process is natural and environmentally friendly, using only the wind and the heat of the sun. It also creates high-quality salt, which has won plaudits from Japanese soy sauce manufacturers and tsukemono pickle producers who value it for its texture, and marine product processors, many of whom refuse to use any other salt. Shark Bay salt is also sold for food use in Taiwan, Indonesia and the Philippines.

Located a further 550 kilometers up the coast from Shark Bay, Onslow salt field has an area of approximately 8,600 hectares, or 1,900 times the size of the average baseball stadium, almost double the production capacity of Shark Bay, and port facilities enabling 50,000-ton class ships to berth.
When it emerged that Akzo Nobel was selling its interest in Onslow, Mitsui decided to take the opportunity to become a major shareholder in the salt field. In addition to the sound commercial basis for this decision, Mitsui saw the role that it could play in ensuring a stable supply of salt for major Japanese chlor-alkali manufacturers, as well as manufacturers in other Asian countries, amid increasing concern about salt supply in the Asian market.
The acquisition also enables Mitsui to demonstrate its comprehensive business engineering capabilities through involvement with major chlor-alkali manufacturers at various stages along the value chain, not only supplying the salt that serves as the basic raw material for their chlor-alkali business, but also subsequently purchasing their products and selling them throughout the world.
Mitsui will harness the expertise it has gained through its long involvement in Shark Bay Salt in operating this much larger solar marine salt field, and intends to continue to fulfill its mission of securing stable supply of the resource for the chlor-alkali industry in the future.

Following the Onslow acquisition, the next challenge for Mitsui is to ensure efficient, unified management of the two salt fields.
One key element of portfolio optimization is ensuring that the right salt is sold to the right customer. Mitsui aims to increase its sales of Shark Bay salt to food manufacturers, and the Onslow acquisition will also help Mitsui in this regard, because through it Mitsui has secured ample supply capability.
Another aspect of matching customers to salt fields is matching order amounts to port sizes. Mitsui intends to shift customers with needs for larger quantities of salt to Onslow, where the bigger port is capable of berthing vessels up to 50,000 tons, compared to the 32,000-ton maximum berthing capacity at Shark Bay.
Mitsui will also leverage synergies between the two salt fields to improve logistics efficiency: 3.8 million tons annually is a lot of salt, and the salt business allows no room for failure in planning and managing shipping schedules so that customers receive their salt at the requested time.

So what does the future hold for Mitsui's salt business? First and foremost, Mitsui will continue to strengthen its position as a stable and comprehensive salt supplier by optimizing all aspects of its existing salt portfolio and developing its salt operations in Asia.
At the same time, Mitsui will remain constantly on the lookout for new opportunities. Solar marine salt has low production cost because of the natural production process. The main cost is transportation. Therefore, ideally salt fields should be located close to the markets that they supply.
Mitsui's existing salt fields in Australia enable it to meet demand in the Pacific region. There are also opportunities in other markets. If the right opportunities should arise, Mitsui would certainly consider acquiring salt fields in other regions.
In terms of portfolio optimization, expansion in Asia, and extension of global reach, the potential to develop the salt business is as limitless as the resource itself.

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