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Dec. 04, 2006
Sumitomo Corporation

Sumitomo Corp. buys equity stakes in two coal-mining firms under VINACOMIN

Sumitomo Corporation (President: Motoyuki Oka; Headquarters: Chuo-ku, Tokyo, Japan; hereinafter "Sumitomo") has acquired equity stakes in two companies that are mining anthracite coal under the wing of Vietnam's state-owned Vietnam National Coal-Mineral Industries Group (General Director: Doan Van Kien; Headquarters: Hanoi, Vietnam; hereinafter "VINACOMIN").

Details and background
Vietnam has been accelerating its efforts to privatize state-run companies, with an eye toward obtaining membership of the World Trade Organization (WTO). VINACOMIN, a state-run company which has effectively monopolized the coal business in Vietnam, offered tenders for equity stakes (20% of outstanding issues) of four anthracite-mining companies operating under its wing. Sumitomo had participated in tenders for two of the four companies and its bid was successful. Sumitomo acquired 5% of shares offered this time for each of the two companies. Payments for the deal are set for completion by the end of November 2006. The share purchase marks the first time a Japanese company has invested in Vietnam's coal business.

Anthracite coal contains a low percentage of volatile matter and has higher calorific content than ordinary coal. Anthracite coal is used by steelmakers for sintering iron ore powder and for pulverized coal injection (PCI) at blast furnaces. It is also used as fuel by other general industries. Reserves of anthracite coal resources exist unevenly around the world, with Vietnam being a major producer. VINACOMIN is estimated to produce about 37 million tons of anthracite coal in 2006. Japanese consumers, including steel industry have concluded contracts with VINACOMIN to buy more than 3 million tons of anthracite coal a year, a sum accounting for about half of annual anthracite imports for Japan.

Sumitomo has enjoyed favorable business relations with VINACOMIN for some 10 years, handling more than half of Japan-bound anthracite coal produced by the Vietnamese company for use by the Japanese steel and cement industries. With the latest equity-share purchase deal, Sumitomo will further reinforce its relations with VINACOMIN's coal business while keeping close tabs on moves in Vietnam to privatize state-owned companies. In addition, Sumitomo aims to expand collaborative relations with VINACOMIN in the development of mineral resources other than coal, such as copper and bauxite.

Vietnam and Japan have been making efforts to improve the former's investment conditions for foreign businesses under mutual collaboration of the governments and business communities of both countries. Based on such efforts, including the Japan-Vietnam Joint Initiative, direct investment into Vietnam by Japanese companies is expected to expand in the future. Sumitomo is prepared to step up business operations in Vietnam continuously, including the implementation of a project to improve the infrastructure for an industrial complex in Thang Long.

Outline of VINACOMIN and invested companies
Corporate name Vietnam National Coal-Mineral Industries Group
Headquarters Hanoi, Vietnam
Representative Doan Van Kien
Capital 2,830,444,000,000 VND (about \21.2 billion)
Shareholder Vietnamese government 100%
No. of employees About 98,000
Primary business Development, production and sale of coal, bauxite and copper; and power generation

Companies in which Sumitomo has invested under the latest deal:
Cao Son Coal Company: annual production capacity of 3 million tons
Deo Nai Coal Company: annual production capacity of 2.5 million tons
(Both companies mine anthracite coal for shipments to Japan)



Corporate Communications Department,
Sumitomo Corporation

TEL:+81-3-5166-3100News Release Contact Form

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