Mitsubishi Materials - Company History

From the purchase of Yoshioka to the founding of Mitsubishi Mining

Mitsubishi Shokai formally entered mine management in 1873 by acquiring the Yoshioka mine in Okayama Prefecture[1][2], and went on to take Osarizawa in 1887 and the Ikuno and Akenobe mines in 1896, bringing one of the largest networks of non-ferrous metal mines in Japan under its control. It widened the business in coal as well, holding collieries such as Oyubari, Takashima and Hashima, and in 1918 it separated the mining division into an independent company, Mitsubishi Mining[3]. As one of the core businesses of the Mitsubishi zaibatsu — the family-controlled industrial conglomerates of pre-war Japan — Mitsubishi Mining long held its presence in the country's mining industry through the pre-war period, and even under the wartime controls on resources it carried an important role in supplying the state with raw materials. As the Second World War went on, Mitsubishi Mining set up new metal-processing divisions to answer the demands of the state and of heavy industry, opening Tokyo Metal Industries (now the Oi plant) in February 1942, the Niigata Metal Works (now the Niigata plant) in January 1944 and the Non-Ferrous Metal Works (now the Okegawa plant) in April 1945, one after another. These processing sites became the starting point that shaped the business base of the later Mitsubishi Metal Mining. Through the post-war dissolution of the zaibatsu, Mitsubishi Mining was designated in February 1948 under the Law for the Elimination of Excessive Concentration of Economic Power, and in 1950 a reorganisation separated the coal business into Mitsubishi Kozan 三菱鉱山 and the non-ferrous metals business into Taihei Mining[4]. The successor company that took over the non-ferrous business inherited every asset and operation belonging to the three divisions of mining, smelting and metal processing, was separated with capital of $1.9M (¥700m), and in December 1952 changed its trade name to Mitsubishi Metal Mining. Mitsubishi Metal Mining later changed its name again to Mitsubishi Metal[5], and set out as an independent company on the basis of the technical accumulation and the mine-management know-how inherited from before the war. Mitsubishi Metal built its business around four principal mining operations — Osarizawa, Hosokura, Ikuno and Akenobe — but each employed several thousand people, and the fact that it carried a company-town business model tightly bound to local employment was the element that would define the difficulty of the contraction to come.

After separation, Mitsubishi Metal Mining placed mining, smelting and processing as the three pillars of its management and built out its sites one after another, establishing the Akita Smelter in December 1953 and acquiring the Myoho mine in October 1954 to thicken an integrated supply system for non-ferrous metals. In January 1962 it formed Mitsubishi Reynolds Aluminium in a tie-up with Reynolds Metals of the United States, and in December 1963 it established Onahama Smelting[6], widening its materials business across both aluminium and copper smelting. Alongside this, movement towards diversification beyond the frame of the non-ferrous metals business began in earnest in the 1960s, and a tie-up with Walter of Germany produced Mitsubishi Walter Tool, carrying the company into the field of cemented carbide tools[7]. By setting about building a business base outside mining it aimed to spread its sources of earnings, but at the time mine management was still the centre of the company, and the cemented carbide tool business remained a complementary operation of limited scale. In the year to March 1968 it shrank the loss-making mining division and brought the Okegawa plant out of the red as well, posting sales of $133M (¥48bn) and after-tax profit of $2.3M (¥830m) and maintaining a 10 per cent dividend[8], with mining, smelting and processing together underpinning the earnings of an integrated metals manufacturer. The early investment in cemented carbide tools, though, would grow in later years into a substitute pillar of earnings as the core mining business contracted, following a course that came to be judged in hindsight as a strategically far-sighted decision.

Fifteen years of closures create the terms for the reunion of the mining houses

The appreciation of the yen after the Nixon shock of 1971 coincided with the falling ore grades that had set in around 1970, and in 1972 Mitsubishi Metal began closing its domestic mines in stages. It first separated five mines — Shimokawa, Furutobe, Matsuki, Hosokura and Akenobe — into subsidiaries, then closed the Ikuno mine in 1973 and the Osarizawa mine in 1978, and so continued the contraction of its domestic non-ferrous metal mines across fifteen years. When the Plaza Accord of 1985 drove the yen higher still, the four remaining mines were forced to close one after another between 1986 and 1987, and the long staged withdrawal of fifteen years was all but complete.

In the course of the mine closures the company did not simply shut production sites: new processing plants were built on the vacated ground, and this regard for maintaining local employment is remembered as a distinguishing feature of Mitsubishi Metal's management policy. The management judgement to seek a gradual conversion of the business, in a form that would not collapse at a stroke the company towns long rooted in the provinces, was handed down inside the company as an organisational culture that also served to smooth the post-merger integration later on. The experience of the mine closures accumulated within the company and became the occasion that formed the foundation of the management style distinctive to Mitsubishi Materials — settling loss-making businesses on a long time axis.

Because the closing of the domestic mines was all but complete, the conditions for a merger between Mitsubishi Metal and Mitsubishi Mining & Cement, separated ever since the post-war dissolution of the zaibatsu, were at last in place. President Fujimura Masaya (藤村正哉) said of the merger that successive managements had thought they would like to come together eventually, but that the conditions for a merger had not been in place[9] — suggesting that the completed settlement of the mines and collieries was precisely what made the premise of a reunion forty years in the making hold. The paradoxical structure in which the contracting phase of mining became, just as it stood, the precondition for reintegration was the decisive background to the founding of Mitsubishi Materials in February 1990, an important juncture in the post-war history of Japan's materials industry[10].