Thursday, October 29, 2009

"Sumitomo Metals Group Strategically Integrates Its Secondary Battery Material Business"

October 28, 2009
Sumitomo Metal Industries, Ltd.
Chuo Denki Kogyo Co. Ltd.


Sumitomo Metals Group Strategically Integrates Its Secondary Battery Material Business
 
- Consolidation of Group's material businesses aimed at insuring strong growth in secondary battery material business -


Sumitomo Metal Industries, Ltd. (Sumitomo Metals) and Chuo Denki Kogyo Co. Ltd. (CDK) agreed today to strengthen the Sumitomo Metals Group's secondary battery*1 business by consolidating related business to CDK. The two companies will strengthen their capital relationship*2 and integrate their human resources and technologies that are indispensable to improving the performance of secondary batteries. Through these measures, the Group aims to expand its secondary battery material business in which growth is expected for automobiles and other applications.

*1:A secondary battery is a rechargeable battery that can be used repeatedly.
*2:Sumitomo Metals' secondary battery material businesses will be succeeded by CDK. Sumitomo Metals will then receive 4,000,000 new common shares of CDK as consideration for the businesses. Sumitomo Metals' shareholding ratio of CDK will increase from 29.29% to 38.24%.

1. Summary of Business Integration

(1) Outline of integration
The Sumitomo Metals Group's current secondary battery material business is described in the table below. CDK will consolidate and integrate the secondary battery material business of the Sumitomo Metals Group, by succeeding Sumitomo Metals' graphite business and making Sumikin Molycorp, Inc.(Sumikin Molycorp) a wholly-owned subsidiary.

Company nameLithium-ion battery material businessNickel-hydrogen battery material business
Sumitomo MetalsManufacture and sale of graphite for anode material-
CDKManufacture and sale of manganese sulfate for cathode materialManufacture and sale of hydrogen storing alloy for anode material
Sumikin MolycorpManufacture and sale of alloy materials for anode material-

Sumikin Molycorp manufactures and sells alloy material for magnets as well as for anode material. The magnet alloy material uses rare earth as a major material, and so is the hydrogen storing alloy for nickel-hydrogen batteries that is manufactured by CDK. Thus, the two companies have a great deal in common regarding manufacturing technologies. While expecting synergies from the integration, they will continue to make efforts aimed at growth and further development.

(2) Background and Objectives
At present, lithium-ion batteries are commonly used as secondary batteries for mobile phones and personal computers, whereas nickel-hydrogen batteries are most commonly used in hybrid cars and other green cars. For automobiles, however, growth in the application of high-capacity lithium-ion batteries is expected. In anode materials for lithium-ion batteries, graphite is mainly used at present but the application of alloy is expected to grow due to its high capacity and long-term usability.

CDK aims to become a leading company in electrode materials for secondary batteries. As it will have a diverse product line-up in this field, ranging from manganese sulfate for cathode material in lithium-ion batteries to various anode materials, it will be capable of responding to customers' requests.

The Sumitomo Metals Group will accelerate performance improvement in secondary batteries by leveraging the consolidated strengths of three companies: Sumitomo Metals in leading-edge material technologies; CDK with its market-leading position in hydrogen storing alloy for anode materials used in nickel-hydrogen batteries; and Sumikin Molycorp with its market-leading position in alloy for magnets.

In the area of research and development, group-wide efforts are being made to develop leading-edge technologies.

(3) Date of integration
December 1, 2009 (Plan)

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