In 2008, the team faced the biggest turning point since the start of the project. Due to Apex Silver’s operating loss, Sumitomo Corporation was forced to take on the restructuring of financial and personnel plans for the project.
In the project restructuring, productivity had to be improved and costs reduced, which would take time; continuous support in terms of both financial and human resources was required, and Sumitomo was the only organization capable of providing it. Therefore, project staff started working to acquire a 100% interest in the mine.
Sumitomo had no engineers or experience, and the project was worth 100 billion yen. It was highly unusual for a trading company to be involved in a mining business on its own, and deep discussions were held.
But the project was delayed from the start and its assessment was not high. In addition, there was little understanding of the local situation, and uncertainty resulting from the lack of information fed distrust within the company.
Mitsuo Shimofuji, who had been with Sumitomo for less than a year, flew to Bolivia on a long-term assignment to clarify the local conditions and operations and report back to Japan. No one had had such experience and there were no manuals to guide him. Shimofuji said, “I knew nothing. I just tried as hard as I could through trial and error.”
Ayumu Yamazaki, who was in charge of obtaining in-company approval, reported on the project to the head office in Tokyo, “This project will surely improve. I’m not going to abandon it.” There was not a moment to lose because mining operations would stop without funds. He worked hard to prepare reference materials and project proposals to obtain in-company approval. “I thought I would never gain approval if I gave up. Although it was physically demanding, I was sure the project would be approved.”
Gradually, he was able to win trust in the project within the company, and the company buckled down to restructure the project under a full-ownership scheme.
Then the global financial crisis struck and market prices fell. The size of investment in the project was unprecedented in Bolivia. “It was tough, but I believed we should persevere with the project in view of the mine’s potential,” said Masaru Hara, who served as a deal maker with a banking syndicate in New York and with Apex Silver at that time. He led the negotiations, drawing on the expertise of various specialists, such as external financial advisors and a legal team, as well as managerial staff at Sumitomo Corporation of America and Sumitomo Corporation in Japan.
By the end of 2008, both parties had agreed in principle to a sale of the share capital, and thus it was that Sumitomo acquired a 100% stake in the mine on March 24, 2009. On that day, the commitment of everyone involved in the project came to fruition and Sumitomo Corporation started operating the mine.
Prior to the agreement, staff were dispatched to the site to cut costs hard. The mining business is at the mercy of the market, and so from a managerial point of view it is crucial to keep costs down. “In fact, there were virtually no controls in place,” noted Shunsuke Nagashima, who is now at the heart of financing and accounting at the site. He started by reviewing the situation. To build relations of mutual trust between the mining site and the accounting team, opinions at the site were communicated to the accounting team, while the team tried to pinpoint difficulties for the site workers. By serving as a mediator in this way, he started to address the challenge.
