Mitsui Kinzoku - Company History

From the Kamioka transfer to integrated smelting

The Kamioka mine is said to have been opened in the Wado era of the early eighth century — the year 708 — and to have yielded copper from that time[1], with gold, silver, copper and lead dug from it in succession through the Nara and Heian periods and on through the Sengoku and Edo eras. It is an old mine, and Mitsui Mining & Smelting has always placed its own origins within that long history of extraction. In 1874 Mitsui-gumi (三井組) received the Jabarahira adit (蛇腹平坑) of the Kamioka mine from the Meiji government by transfer, and entered the business of non-ferrous mining[2]. Kamioka boasted the largest zinc output in Japan and ranked with Sullivan in Canada and Broken Hill in Australia among the world's great lead and zinc mines[3], becoming the earnings pillar that supported the mining division of the Mitsui zaibatsu (財閥), the family-controlled industrial conglomerate. In 1892 Mitsui Mining (三井鉱山合資会社) was established to run the metal mines and the coal mines as a single operation[4], and in 1913 a new zinc smelter was raised at Omuta, building a vertically integrated production system in which zinc concentrate mined at Kamioka was finished into electrolytic zinc metal at the company's own smelter[5]. This integrated model — upstream through midstream held in-house — became the prototype of the business model that would be carried forward in later years.

Through the process of the post-war dissolution of the zaibatsu, the metals division of Mitsui Mining was made independent on 1 May 1950 as Kamioka Mining under the Enterprise Reconstruction and Reorganisation Law, a landmark in the history of post-war reorganisation[6]. At the outset it was not permitted to use the zaibatsu trade name, so it set out under the name Kamioka Mining with capital of $1.7M (¥600m)[7]; in the same year it achieved a listing on the Tokyo Stock Exchange and began its course as an independent company[8]. In October 1951 capital was increased to $3.3M (¥1bn), and in December of that year the Tokyo Research Laboratory was established, among other steps to build up and strengthen the organisation[9]; in December 1952 the trade name was changed to Mitsui Mining & Smelting[10]. The advanced know-how in mine management and smelting technology accumulated as a member of the Mitsui zaibatsu was carried over as the foundation for expansion after independence, and a production system was put in place to answer the vigorous post-war demand for non-ferrous metals. Within a post-war Japanese economy in which the reorganisation of the resource and materials industries was advancing, Mitsui Mining & Smelting followed a path of raising its presence within the industry even after independence, with the strength of the Kamioka mine as its weapon.

Overseas ore and pollution: the contradiction inside growth

After independence Mitsui Mining & Smelting concentrated first on expanding its directly operated works. Beginning with the completion of the Kanakido power station at the Kamioka mining works in June 1953, it modernised its smelting plant in quick succession: the first phase of the vertical-retort zinc plant at the Miike smelter in January 1954, the converter waste-gas recovery works at the Hibi smelter in June 1956, and the flow-solid roasting furnace at the Kamioka works in June 1957[11]. In the 1960s it accelerated diversification, creating a wrought-copper division and a die-casting division in 1962 to step downstream into fabrication[12], and absorbing both Oji Metal and Showa Die Casting in April of that year[13]. In 1964 it acquired an interest in the Huanzala mine in Peru and entered overseas resource development[14]; in June 1965 it built the Mitaka plant[15], and in 1967 it established Hachinohe Smelting, extending zinc smelting to a three-site structure of Kamioka, Hikoshima and Hachinohe[16]. Capital rose as well, from $6.7M (¥2bn) in November 1954 to $13.3M (¥5bn) in June 1958, $20M (¥7bn) in May 1962 and $30M (¥11bn) in February 1965[17], deepening the vertical integration from smelting into fabrication with Kamioka at its core.

In 1972, on the other hand, the question of compensation for Itai-itai disease (イタイイタイ病) came to the surface, and Mitsui Mining & Smelting was driven into a position in which it passed its dividend, facing the difficult task of pursuing pollution control and the rebuilding of the business at the same time. The cadmium contained in the effluent from the Kamioka mine was held to be the cause of the health damage that had been occurring over many years along the Jinzu river in Toyama Prefecture, and Mitsui Kinzoku took the heavy decision to meet the compensation of the victims[18]. The pollution question left a deep wound in the company's standing in society; from then on environmental measures were always present in its management decisions as an important constraint, and they remained long in the minds of the executives as a serious structural element that would govern the future plans for the Kamioka mine, the company's core business. Remembered as the negative face of post-war high growth, the pollution question exerted a profound influence on the management philosophy of Mitsui Kinzoku as a resource company.

The Itai-itai compensation of 1972 overlapped with the rise of the yen that advanced in the same year, and together they brought into the open the falling international competitiveness of the Kamioka mine — a turning point at which the mining business, long the pillar of earnings, came up against a structural problem. The long prosperity of Kamioka, built up since 1874 as the mining business of the Mitsui zaibatsu[19], entered an irreversible phase of contraction under changes in the external environment — the tightening of environmental regulation and the movement of the exchange rate — and it became a symbolic event that strongly foreshadowed the arrival of an age in which a fundamental review of the integrated non-ferrous model would be thrust upon management. The executives were for the first time confronted with a fundamental doubt about the sustainability of the business structure that had supported Mitsui Kinzoku since the war, and the moment became the occasion on which the argument over the need for a conversion of the business began.