Mitsubishi Materials
Corporate History & Strategy

Mitsubishi Goshi Kaisha (the Mitsubishi zaibatsu) entered the mining business by acquiring the Yoshioka Mine in Okayama Prefecture in 1873 (Meiji 6), subsequently acquiring a succession of domestic coal and non-ferrous metal mines. In non-ferrous metals, a new smelter was built on Naoshima Island in the Seto Inland Sea in 1918 to establish an integrated system for refining copper ore extracted at the Yoshioka Mine. In 1887, the Osarizawa Mine in Akita Prefecture was acquired, expanding the domestic mine portfolio. Through these mine acquisitions, the Mitsubishi zaibatsu secured non-ferrous metal resources including gold, silver, copper, lead, and zinc.

In the coal business as well, the Mitsubishi zaibatsu owned large-scale mines such as the Oyubari Coal Mine (Hokkaido), Takashima Coal Mine (Nagasaki Prefecture), and Hashima Coal Mine (Nagasaki Prefecture), establishing one of the country's leading coal production systems. From the Meiji era through the Taisho era, the Mitsubishi zaibatsu grew into a resource enterprise possessing some of the nation's premier mine portfolios in both non-ferrous metals and coal, with mining positioned as a core business of Mitsubishi Goshi Kaisha.

In April 1918, Mitsubishi Goshi Kaisha spun off its mining department to establish Mitsubishi Mining Co., Ltd. As the Mitsubishi zaibatsu progressively incorporated its business divisions alongside business expansion, the incorporation of the mining division was part of this process. At the time of establishment, Mitsubishi Mining held some of the nation's premier mines and was launched as a profitable business within the Mitsubishi zaibatsu.

Mitsubishi Mining's scope of operations was broad, encompassing not only non-ferrous metal mine extraction and smelting but also domestic coal mining. The primary sites at establishment included the Yoshioka and Osarizawa mines for non-ferrous metals, and the Oyubari, Takashima, and Hashima mines for coal, commencing operations as one of the nation's leading resource companies combining large-scale coal mines and non-ferrous mines.

Under the postwar zaibatsu dissolution (Elimination of Excessive Concentration of Economic Power Act), the former Mitsubishi Mining was required to separate its coal and non-ferrous metal businesses. In 1950, the coal business was succeeded by Mitsubishi Mining (second generation), while the non-ferrous metals business was launched as Taihei Mining (later Mitsubishi Metal). As zaibatsu trade names were not permitted immediately after the separation, the trade name Taihei Mining was used until 1952. In 1952, the company name was changed to Mitsubishi Metal Mining, establishing a structure to serve as the non-ferrous metals arm within the Mitsubishi Group.

At the time of Taihei Mining's establishment, it held 14 domestic mines and operated three main smelters in Osaka, Naoshima, and Akita as a major domestic non-ferrous metals company. Notably, the 1990 merger of Mitsubishi Metal and Mitsubishi Mining & Cement (the company resulting from the former Mitsubishi Mining's name change) represented a reunion of the two companies separated from the former Mitsubishi Mining in 1950, approximately 40 years later.

The main sites for Mitsubishi Metal in the 1950s were the Osarizawa mining operations (Akita Prefecture), Hosokura mining operations (Miyagi Prefecture), Akenobe mining operations (Hyogo Prefecture), and Ikuno mining operations (Hyogo Prefecture), each with workforces exceeding 1,000 employees. These mines produced mineral resources centered on lead and zinc along with gold, silver, and copper, which were refined into products at facilities including the Naoshima Smelter in the Seto Inland Sea.

In the immediate postwar period, Mitsubishi Metal's core business was mining at domestic mines, generating revenue through labor-intensive extraction operations at each site. All four main mining operations were large-scale facilities located in regional areas, also serving as employment anchors for their local economies. This employment structure would become a significant consideration during the subsequent domestic mine closures.

The yen appreciation following the 1971 Nixon Shock deteriorated the economics of non-ferrous metal mining within Japan. The major mines held by Mitsubishi Metal Mining also faced the challenge of ore grade decline from years of extraction, with a simultaneous progression of declining international competitiveness and deteriorating ore bodies. Domestic extraction operations entered a structurally difficult phase, and the survival of the main mines emerged as a management issue.

Mitsubishi Metal Mining's main mines were the four sites of Osarizawa, Hosokura, Ikuno, and Akenobe, each a large-scale facility in a regional area serving as local employment anchors. Mine closures would significantly impact local economies, and management sought a policy that balanced gradual business downsizing with consideration for employees while maintaining the requirement of employment preservation.

From 1972, Mitsubishi Metal Mining commenced the closure of its main domestic mines. Five mines—Shimokawa, Kodomobe, Matsuki, Hosokura, and Akenobe—were separated into subsidiaries, with gradual business downsizing pursued while giving consideration to employees. In 1973, the Ikuno Mine was closed, and a processing products manufacturing facility, 'Ikuno Works,' was established on the former site for the purpose of maintaining employment. In 1978, the main Osarizawa Mine was closed, and no mine directly operated by Mitsubishi Metal's parent company remained.

The domestic mines separated into subsidiaries experienced further deterioration in their financial condition as the yen continued to appreciate through the 1980s. The rapid yen appreciation following the 1985 Plaza Accord made maintaining profitability impossible, and in 1986–1987, four mines—Hosokura, Shimokawa, Kodomobe, and Akenobe—were closed in succession. Approximately 15 years after the 1972 business separation, Mitsubishi Metal completed the closure of its main domestic mines, effectively withdrawing from domestic mining.

In February 1990, Mitsubishi Metal and Mitsubishi Mining & Cement merged to establish Mitsubishi Materials. The merger partner, Mitsubishi Mining & Cement, corresponded to 'Mitsubishi Mining (second generation),' which had succeeded the coal business separated from the former Mitsubishi Mining during the 1950 zaibatsu dissolution, and had driven a business transformation from coal to cement throughout the period of high economic growth. The two companies separated from the former Mitsubishi Mining thus achieved a reunion approximately 40 years later.

The reason the merger had not been realized for 40 years since the 1950 company separation was that both companies had expended enormous management effort on closing domestic non-ferrous mines and coal mines, bearing chronic management challenges. Mitsubishi Metal spent 15 years withdrawing from domestic non-ferrous mines, while Mitsubishi Mining & Cement directed management resources toward coal mine closures and the transition to the cement business. By the late 1980s, both companies had largely completed the closure of their main mines and coal mines, creating the conditions for merger.

Post-merger, Mitsubishi Materials recorded consolidated revenue of 910 billion yen and ordinary profit of 25 billion yen in FY1992 (ending March), commencing operations as a materials manufacturer with approximately one trillion yen in revenue. The main business was the smelting segment, accounting for approximately 50% of revenue, and a comprehensive materials manufacturer structure was built around three pillars: smelting, cement, and cemented carbide tools. The silicon wafer business for semiconductors was anticipated as a growth area for new business development.

Mitsubishi Materials became a comprehensive materials manufacturer with 'non-ferrous metals' and 'cement' as its primary axes, launching in a state where the withdrawal from unprofitable domestic mines—a long-standing concern—had been largely completed. The completion of liquidating the negative legacy of domestic mine closures, creating conditions for aggressive management, defined the timing of the merger.

In September 1991, Mitsubishi Materials announced its first post-merger management plan, 'MAX21.' Formulated as a 10-year long-term plan, it set revenue targets of 1.4 trillion yen for FY1995 and 1.8 trillion yen for FY2000. Mitsubishi Materials positioned revenue expansion as its most important management priority, articulating a policy of translating the scale benefits of the merger into business growth.

The 1.8 trillion yen revenue target was set by then-President Masaya Fujimura as a scale that was 'within my field of vision.' With the merger creating a structure encompassing three businesses—non-ferrous metals, cement, and processing—revenue growth was pursued through expanded investment in each business and the nurturing of new businesses. The merger served as the occasion for Mitsubishi Materials to clearly articulate its transformation from a mining company to a comprehensive materials manufacturer.

In 2017, quality fraud was uncovered at Mitsubishi Materials group companies, highlighting the problem that management had been unable to adequately govern and control a business spanning approximately 200 group companies. Behind the quality fraud was a business portfolio that had ballooned through mergers and business expansion, revealing a structural issue in which misconduct occurred in areas beyond management's oversight. Based on this experience, business streamlining was recognized as a critical management priority.

In March 2020, Mitsubishi Materials (President Naoki Ono) announced a three-year medium-term management strategy (FY2020–FY2022), setting 'optimization of the business portfolio' as the company-wide policy. A management approach combining withdrawal from unprofitable businesses and concentrated investment in focus businesses was articulated, committing to the streamlining of the bloated business operations.

The businesses targeted for reduction or withdrawal were the sintered parts business (Diamet Corporation), copper tube business, cement business, and aluminum business, all of which faced profitability issues. Withdrawal through divestiture or consolidation through the formation of 50/50 joint ventures with industry peers was pursued for these businesses. In December 2020, Diamet Corporation was divested, with 22.3 billion yen recorded as business restructuring losses, as withdrawal from underperforming businesses was sequentially executed.

Meanwhile, the processing business was identified as the focus area for investment. In April 2020, Mitsubishi Hitachi Tool was acquired for 24.9 billion yen, strengthening the cemented carbide tool manufacturing and sales structure. The reshuffling of the business portfolio was a combination of capital recovery from underperforming businesses and reinvestment in focus businesses, as Mitsubishi Materials pursued a transformation from a comprehensive materials manufacturer to a more streamlined structure.

Mitsubishi Materials' cement business was acquired through the February 1990 merger of Mitsubishi Metal and Mitsubishi Mining & Cement. The cement business had not originally been a Mitsubishi Metal business—it was a business that the merger partner, Mitsubishi Mining & Cement, had nurtured as a transition from its coal operations. With approximately 30 years having passed since the merger, the separation of the cement business carried the significance of rationalizing a business incorporated at the time of merger.

In the area of cement sales, Mitsubishi Materials and Ube Industries had already integrated their cement sales operations in July 1998, establishing Ube-Mitsubishi Cement. This sales integration served as a stepping stone to the full integration of the cement business in 2022. In September 2020, Mitsubishi Materials and Ube Industries decided on a full integration of their cement businesses, committing to the establishment of a new company that would unify production and sales.

In April 2022, Mitsubishi Materials and Ube Industries established 'UBE Mitsubishi Cement' as a 50/50 joint venture, transferring both companies' cement businesses to the new entity. The aim of the integration was to correct overcapacity in the domestic cement market. On the financial front, Mitsubishi Materials recognized 160.6 billion yen on its balance sheet as an investment in UBE Mitsubishi Cement, an investment that carried the potential for impairment depending on the new company's performance.

Post-integration, UBE Mitsubishi Cement proceeded with production capacity reductions, deciding by March 2023 to close the Aomori factory and shut down the No. 1 kiln at the Isa Cement factory. In connection with equipment decommissioning, Mitsubishi Materials recorded 8.3 billion yen as equity method investment losses in FY2023 (ending March). The rationalization of excess equipment was a measure consistent with the objectives of the cement business integration.

The cement business integration was effectively a separation of the cement business for Mitsubishi Materials. Approximately 30 years had passed since the cement business was acquired through the 1990 merger with Mitsubishi Mining & Cement, and the decision was made to transfer a business incorporated at the time of merger to a 50/50 joint venture. This course of events epitomized Mitsubishi Materials' management challenge of portfolio expansion caused by the 1990 merger and the subsequent need for business streamlining.

The establishment of UBE Mitsubishi Cement represented a full integration approximately 24 years after the 1998 sales integration, serving as the culmination of a process of progressively externalizing the cement business. Mitsubishi Materials had designated the cement business as a reduction target in its 2020 medium-term management strategy, and the launch of UBE Mitsubishi Cement was a measure aligned with this policy.