Masami Iijima - Chief Executive Officer, President, Representative Director, Chairman of Nomination Committee, Chairman of Internal Controls Committee, Chairman of Corporate Management Committee, Member of Remuneration Committee and Member of Governance Committee Keigo Matsubara - Deputy Chief Financial Officer, General Manager of Global Controller Division and Managing Officer Joji Okada - Senior Executive Managing Officer, Chief Financial Officer, Representative Director, Chairman of Disclosure Committee and Chairman of J-Sox Committee

We thank you for coming today. I would like to talk about the financial results for the 6-month period ended September 2013, progress of our investment plans, the outlook for the fiscal year ending March 2014 and our plans for shareholder return.

Please turn to Page 1 of the presentation. Before talking about our results for the first half, I will summarize our operating environment during the period.

In the first half of the year, we have seen a recovery in the global economy at a moderate pace, supported by solid economic growth in Japan, the U.S. and China, despite lingering concern of a possible economic slowdown.

The Japanese economy has maintained a high GDP growth among developed nations, mainly driven by personal consumption and increases in exports, as well as the impact of fiscal measures. The U.S.

economy has led the global economic growth with stable increases in employment and gradual recovery in personal consumption, capital investment and housing investment, despite the concerns of a phased curtailment of QE3, as well as the debt ceiling crisis. While there were concerns of a possible hard landing of the Chinese economy, its GDP growth rate increased to 7.8% in the July to September quarter due to additional infrastructure investments by the government.

This has eased such concerns and, as a result, commodity prices have remained relatively stable. On the other hand, it is likely that Europe will need some time to see a genuine recovery.

While it is not easy to completely dismiss future uncertainties on the global economy, as a whole, our view remains that it will maintain a moderate pace of growth. Against such an operating environment, net income attributable to Mitsui for the first half was JPY 197.2 billion.

The market prices for coal, crude oil and iron ore have declined from the same period of the previous year. And in addition, we have recorded an impairment loss related to a copper mine development project.

On the other hand, such negative factors were outweighed by positive factors, such as the depreciation of the yen; expansion-driven increases in production volumes of iron ore, crude oil and gas; increased dividends from LNG projects; recovery in trading activities of chemicals and iron and steel products, as well as solid sales of automobiles, mainly in Asia and Latin America. These factors contributed to an increase of JPY 28.9 billion compared to the same period in the previous fiscal year.

As a result, our progress for the first half was 53% against our annual plan of JPY 370 billion for net income. I will now talk about the progress we have made in investments and loans on Page 2.

During the first half, we implemented investments and loans in the amount of JPY 550 billion. In line with the key initiatives and our medium-term management plan, we continue to focus on reinforcing our earnings base through new acquisitions of good quality assets and improvement of our existing assets, especially in the upstream sector.

In Metals, we invested JPY 195 billion in total, mainly for our participation in the Jimblebar iron ore mine and expansion of our existing iron ore mines in Australia, development of the Caserones copper mine in Chile, as well as the acquisition of a stake in the automotive components manufacturing operations of Gestamp Automoción in the Americas. We invested JPY 95 billion in machinery and infrastructure, mainly in the water business, smart city developments and rolling stock for leasing.

In Energy, we invested JPY 205 billion in total in acquisition of interest in an Italian onshore oilfield, as well as accelerated expansion of Eagle Ford Shale oil and gas in the U.S. In addition, in our strategic asset recycling measures, aiming at improvement of our portfolio, we collected JPY 110 billion through collection of loans via refinancing and divestitures of real estate, as well as proactive divestiture of shares held by Lifestyle and Innovation & Corporate development in order to achieve returns on past investments.

As a result, net cash outflow for investments and loans and divestitures was JPY 440 billion. We continue to have abundant opportunities for good investments, which have the potential to be our future growth drivers or catalysts for change in our business model.

However, we'll be very selective in allocating our capital and continue with our strategic asset recycling in order to build a strong business portfolio, bearing in mind the shift to a positive free cash flow position. Please now turn to Page 3.

Let's look at our balance sheet and cash flow. The net-debt-to-equity ratio increased to the level of 0.91x from 0.89x as of the end of March this year after execution of investments in the first half of this fiscal year.

However, this level is in line with our initial outlook, and we believe that Mitsui's balance sheet remains strong. Net cash provided by operating activities was JPY 276.6 billion, an increase of JPY 49.5 billion over the same period of the previous year.

This number demonstrates the strong cash flow generation from our businesses. On top of an increase in our operating income, mainly coming from the iron ore business, as well as Iron & Steel Products, Chemicals and Machinery and Infrastructure, we had an increase in collection of dividends from our investments, including LNG projects.

Free cash flow was a net outflow of JPY 172.8 billion, reflecting the investments that I explained earlier. Bearing in mind the shift to a positive free cash flow position, we will continue our selective investments, which will lead to further strengthening of our operating cash flow generation and concurrently pursue strategic asset recycling.

Please turn to Page 5. I would like to talk about our net income forecast for the full year.

Our net income for the first half was JPY 197.2 billion, a 53% progression against our initial forecast of JPY 370 billion. As for the full year, we expect a decline against our initial forecast in the Mineral & Metal Resources segment due to the onetime losses recorded in the first half, while we expect increases from the initial forecasts for Energy, which are showing good progress due to firm crude oil prices and reduction in costs, as well as Lifestyle and Innovation & Corporate Development, which are pursuing returns on past investments through proactive divestiture of shares.

Therefore, we will maintain our full year forecast at JPY 370 billion of net income. While a full scale recovery in the global economy is likely to take some time, we will continue to monitor the changes in commodity prices and exchange rates and maintain a cautious and steady management in order to achieve this year's net income forecast.

Please now turn to Page 6. I would like to talk about our shareholder return policy.

During our current medium-term management plan, our policy is to set the minimum target dividend payout ratio at 25% of consolidated net income. Based on our net income forecast for the year of JPY 370 billion, our envisaged annual dividend is JPY 51 per share.

We are declaring an interim dividend of JPY 25 per share. With that, I would like to ask Mr.

Matsubara to provide you with further details.

Let us turn to the details of our net income for the 6-month period ended September 30, 2013. I will now explain the performance of our individual reportable segments compared with the net income in the same period the previous year.

Please turn to Page 8 of the presentation. For the net income of major subsidiaries and associated companies, please refer to Pages 14 and 15 of the data book.

The amounts I will refer to from now on are all after-tax figures. Energy posted a net income of JPY 94 billion, an increase of JPY 15.1 billion compared with the same period the previous year.

The negative impact of a decline in production from Mitsui E&P Australia associated with overhauling its oil production facility, as well as a decline in coal prices, were more than offset by the positive impact of an increase in dividend income from LNG projects, including Sakhalin II, an increase in production from oil and gas projects and depreciation of the Japanese yen. Chemicals posted a net income of JPY 9.5 billion, an increase of JPY 10.5 billion compared with the same period the previous year.

Positive factors included a reversal effect of the impairment losses on listed securities posted in the same period the previous year, as well as a gain on sales of securities posted this year and a recovery of underperforming trading activities for petrochemical materials. Iron & Steel Products posted a net income of JPY 6.7 billion, an increase of JPY 8 billion compared with the same period the previous year.

There was an improvement in the foreign exchange gains and losses and a positive effect of recovery of trading activities for steel products, as well as a reversal effect of the impairment losses on listed securities posted in the same period the previous year. Innovation & Corporate Development posted a net loss of JPY 3.7 billion, a decline of JPY 10.3 billion compared with the same period the previous year, mainly due to negative reversal effects of gains on the sales of securities posted in the same period the previous year.

Mineral & Metal Resources posted a net income of JPY 44.7 billion, a decline of JPY 5.5 billion compared with the same period the previous year. Although there was a positive impact from the increases in the sales volume from Australian iron ore operations, this was more than offset by the negative impact of an impairment loss on the investment in the Caserones copper mine development project, the onetime loss in scrap metal recycling business and a decline in earnings from Valepar.

Please turn to Page 9. This page shows the breakdown of the change in net income between the 6-month period ended September 2013 and the same period the previous year.

The amounts I will refer to on this page are all after-tax figures as well. I will start with the Onetime Reversal Effect column.

In the same period the previous year, there was a onetime gain on divestitures of securities of JPY 12 billion, including Nihon Unisys. On the other hand, there were impairment losses on securities of JPY 13 billion and other negative factors, and as a result, the net overall reversal effect was a positive JPY 4 billion.

I will move on to the Divestiture & Evaluation Profit/Loss column. Positive effects of JPY 14 billion in total, including gains on sales of shares, were outweighed by the negative effects of JPY 32 billion in total, including an impairment loss on investment in a copper mine development project.

As a result, the net overall effect was a negative JPY 18.0 billion. With regards to market and commodity prices factors, there was a net overall increase of JPY 29 billion due to the depreciation of the Japanese yen partly being offset by the decline in coal, iron ore and oil and gas prices.

As for costs in Metals and Energy, there was a cost increase of JPY 6 billion, mainly in depreciation costs for oil and gas, which was partially offset by cost reductions in coal. Miscellaneous includes positive factors such as JPY 14 billion attributable to increases in the sales volume of oil and gas and iron ore and increases in trading activities driven by a recovery in the global economy.

Please turn to Page 10. We have reorganized our business units effective April 1, 2013, and transferred some of the businesses across different business units.

Further, effective October 1, 2013, the coal-related businesses, except for sales of thermal coal to power utilities, were transferred from the Energy segment to the Mineral & Metal Resources segment. In accordance with this change, on Page 11, the operating segment information of the initial forecast, as well as the revised forecast for the year ending March 2014 have been restated to conform to the operating segment as of October 1, 2013.

Please now turn to Page 11, the last page of my presentation. As our CEO explained earlier, we maintained our net income forecast for the year ending March 2014 at JPY 370 billion.

However, there are changes in the breakdown of operating segments that makes up the JPY 370 billion, and I will now explain the changes in comparison with the initial forecast for each operating segment. For Energy, the projected net income is JPY 172 billion, an increase of JPY 17 billion from the initial forecast.

A negative impact from declines in production from oil and gas projects were more than offset by the positive impact of declines in depreciation costs for oil and gas projects, as well as the depreciation of the Japanese yen and higher consolidated oil prices applied for the first half of the current fiscal year against our initial forecast. For Lifestyle and Innovation & Corporate Development, net income is projected to increase by JPY 6 billion and JPY 4 billion, respectively, from the initial forecast, mainly attributable to increases in gains on sales of securities from the initial forecast, which was partially offset by some negative factors.

For Mineral & Metal Resources, the projected net income is JPY 89 billion, a decline of JPY 23 billion from the initial forecast. The major reasons for the decline are the impairment loss on investment in a copper mine development project, other onetime losses and a decline in coal prices.

For Chemicals, trading activities have recovered as planned, and net income is projected to increase by JPY 2 billion from the initial forecast due to a gain on sale of securities in the first half of the current fiscal year. For Machinery and Infrastructure, net income is projected to decline by JPY 3 billion from the initial forecast.

Our gas distribution business in Brazil and construction machinery-related business are expected to post declines in net income due to the negative effects of exchange rates and weaker demand. For overseas, net income for Americas is projected to decline by JPY 3 billion from the initial forecast, reflecting the loss on sales of SunWize Technologies, a sales and installation business of photovoltaic power systems, posted in the first half of the current fiscal year.

Iron & Steel Products and other overseas segments are performing as planned, and the projected net income remains unchanged from the initial forecast. That completes my presentation.

We would like to thank you for joining us today.

I would like to ask 3 questions. First question is on a minor detail on MRMD, Mitsui Raw Materials Development, the scrap metal recycling business.

It seems it is taking time to turn a profit. Is profit not yet on the horizon?

When will the effects of restructuring appear and show profitability? I would appreciate it if you could fill us in on the details and talk about the outlook.

The second question is about next year, the renewal year of the medium-term management plan. Would you give us a preview of the new plan and talk about the present thoughts to indicate the future direction it will take?

And the third question is on the macroeconomics. Would you give us an outlook on the so-called BRICs economies, such as Brazil, Russia and India, where Mitsui is involved in?

And what are the current business and economic climate in the BRICs economies and the corporate earnings environment of Mitsui?

First, allow me to talk about the recovery of the MRMD business. The affiliate company, which MRMD Investing, have a new management team under a new CEO and have divested from underperforming businesses and exchanged assets with competitors, consolidating the businesses to meet the changes in the market environment.

By pursuing a disciplined investment standard controls, we aim to regain lost ground. I would like to answer the third question next.

As for BRICs economies, the country risk is high in Brazil and Russia. In Brazil, we have interest in Valepar.

There are other projects, for example, involving hydroelectric power generation and investment into railways project with Vale. We are seeing gradual increases in exposure not related to Valepar as well.

Because of the abundant resources in these countries, the growth potential of the BRICs economies is high, and we believe it has good business opportunities. As for Russia, we have a major investment into Sakhalin II LNG project, and there are many project ideas, but none of them are concrete.

As for India, we do not have a large position there. However, we are making small investments into Lifestyle segment and steel product projects and hope to make gradual inroads in the market.

Politics in India can be unstable, and we will be aware of tax and legal risks there as well. The scrap business is a very competitive business, and the scrappers have had a very difficult time in the past 3 to 5 years.

As the largest shareholder, we will work immediately on rebuilding the company under the new CEO, the chairperson and the new management team and provide fine-tuned oversight. We have seen recent upward momentum in the scrap business, so we hope to introduce tightening measures this year and closely monitor its performance.

Allow me to add my comments on the emerging economies. First, on Brazil, where the GDP in 2012 was 0.9%.

I had an opportunity to visit Brazil in August for the Japan, Brazil eminent persons group meeting and in September for the economic joint committee meeting and had an opportunity to have discussions with representatives of Brazil Industry Alliance. The GDP for 2013 is forecasted to reach 2.5%.

With the impending presidential election next year, it is expected that the president will introduce new economic stimulus measures. We can also expect continued infrastructure investments with the World Cup next year and the Olympics and Paralympics in 2016.

Brazil is also at a state of full employment economy, so having visited the country twice this year, I did not get the impression that the economy is bad. Having said that, we understand that there are certain issues in Brazil, for example, specific Brazilian costs we need to consider, and the weak distribution infrastructure and the weak manufacturing competitive power.

However, in light of the strong domestic demand, the manufacturing sector will get by. While the industrialized nations are doing well economically, we cannot expect Brazil to show a drastic recovery, but it's sure to pick up more next year compared to this year.

As for Russia, I have attended FIAC, Foreign Investment Advisory Council meeting 5 times in a row. FIAC is led by the then Prime Minister Putin and now by Prime Minister Medvedev.

Piecing together what was discussed at the meeting, the GDP this year is expected to be 3% and 3.5% next year. Russia is looking at expanding into Siberia, the Far East and the Asia Pacific region with a new distribution network and to build a new industrialized zone in the Far East.

With such economic development projects, we can expect Russia to take a gradual recovery path. Next, as for the question on the medium-term management plan.

As I have repeatedly said in the past, we believe it better to give a comprehensive report than to give a number of previews. We are planning to hold the annual management meeting on the 18th and 19th of November, and we will focus on discussing some priority issues, for example, looking at extending the medium-term management plan framework from the current 2 years and how we will position this plan in the long-term management vision of what we like our company to look like in the year 2020.

This long-term vision was compiled in 2009. We will also discuss how to turn around the negative free cash flow we have seen 3 years in a row.

We are also reconsidering the shareholder return policy, which you may be particularly interested in, and also the future growth strategy. We will have a substantial discussion in order to come up with a solid plan to share with you, so please wait for our announcement with high expectations.

My first question is on the progress of Mitsui E&P, MEP, Mozambique. Will FID commence next year?

And the second question is on the Caserones copper, which recorded an impairment loss, I believe, due to increase in development investment. But if the market assumption does not alter, will it be just a one-off loss?

And the third question is on the performance of Energy, which is forecasted to deteriorate compared to the first half. Could you give us an explanation?

As for your question on Mozambique, we are currently in FEED and will make FID in 2014 and begin production in 2018. Our goal has not changed, and we believe it is progressing well.

As for Caserones, if the market condition does not change, we believe everything will go according to schedule, and this impairment loss will be a one-off. And as for the question on Energy business, the 2 main reasons why the number is smaller in the second half is due to the difference in the dividend income from Sakhalin II and the difference in the foreign exchange predictions.

Regarding Mozambique, of course, it may depend on the amount of investment, but will fluctuation in capacity and free cash flow recovery lead to an increased burden on cash in the future? As far as Energy is concerned, the free cash flow to be recovered and the cash out of Mozambique will be kept at a balance, although it is a fact that the investment burden on Mozambique is heavier.

This question is related to the first question on investment. The investment is expected to total JPY 1 trillion this fiscal year.

But in order to recover from negative free cash flow, would it be necessary to suppress investment in the future? And if so, what measures will you take to decrease the amount of investment?

And my second question is on the copper business. Production volume of copper seems to be recovering in Kujawashi [ph].

But in view of a long-term expansion, how will these resources be monetized economically in Kujawashi [ph] and Anglo American Sur, AAS, when development cost is increasing as we saw in the impairment losses at Caserones? Would you give us your views on the long-term potential?

I think the first question was on how to recover from the negative free cash flow while the investment has surpassed JPY 1 trillion last fiscal year, as well as this fiscal year. We had seen significant increase in investment into metal.

If we compare the investment into metal and energy, and non-metal and energy, it was 40% to 60% before 2011. But in the past 2 years, it has shown a reversal, mainly due to expansion in the iron ore sector with planned investment being implemented.

The investments into metal and energy will go back to cruising speed, and we will see a drop in metal investment from the next fiscal year. We will do so by enhancing our investment discipline and conducting asset reviews and recovery and what we call strategic recycling.

As for the copper production, we saw an unsatisfactory result last fiscal year due to malfunction of the pulverizer. But after the replacement of the parts, it is showing a recovery.

Also, we were seeing low-grade copper last fiscal year, but the quality of the copper is showing an improvement and, if all goes well, we are confident to recover to the earnings level before the decline. As for AAS, it is showing a good start.

In some of the mines, we are behind schedule. However, because the production volume is small, there is not a big impact.

We hope to increase our earnings here as well. With this project, our plan, in the long run, is to eventually develop a nearby mine, so as to create a synergy effect to boost production.

I have 3 questions. The full year forecast of metal has been revised downward by JPY 23 billion.

Is this the result of recording of the impairment loss of the first half? And if nothing drastic happens, will it show an increase since the profit in the first half and second half does not seem to show much change?

And my second question is on the Lifestyle segment and Innovation & Corporate Development segment. Looking at the first half, if there was no onetime profit from sales and asset recycling, it may have ended up in a negative figure.

Will the situation change next year? And will there be assets to sell next year?

Or do you expect growth in other businesses? If there is no asset for sale, it may end up not showing any profit in the next medium-term management plan.

And my third question is on shareholder return policy. This needs to be considered in combination with positive free cash flow.

In other words, if positive free cash flow is not achieved, does it mean that there will be no shareholder return? And I would like to have the President's take on what he deems as shareholder return.

Is it dividends or buybacks?

As for the first question on the decrease in profit from the first half in Metals, the main reasons are the impairment loss of Caserones of JPY 14 billion and weakness, including impairment losses, of the scrap business. The decreasing coal price and increasing iron ore price is offsetting each other.

As for your question on Lifestyle segment in the food resources business unit, multigrain is not doing well. We are targeting 20 million tons for global grain distribution and, in the first half of this fiscal year, we have recorded 8 million tons, gaining good distribution revenue.

I believe there is room for multigrain to grow if it can reach cruising speed. The food products and services business unit is lagging behind other trading companies, like Mitsubishi and Itochu, when it comes to wholesale business.

But we believe we will show profit through our collaboration with Seven & I. Consumer service business unit plan a big gain of sales of assets, and there is a big pillar in this unit, that is health care.

With IHH and MicroBiopharm Japan showing steady profit and AIM service and media recording base profits, we hope to come up with a firm strategy to grow these areas further. As for Innovation & Corporate Development segment, this is a segment we are struggling in.

But as you can understand from its name, it has a role of providing functions to other businesses units and, as they bear the cost, it is quite difficult to turn a profit. We will take a closer look at this segment, including its structure to make it a profit-bearing system.

I would like to add to the CFO's comment. As for Lifestyle and innovation businesses, while we can expect a certain degree of profit from its businesses, we hold firm salable assets.

Therefore, we have plans for asset divestiture in the second half and, at the same time, hope to achieve returns from the past investments made so far. As for shareholder returns, we hope to achieve positive free cash flow in the next medium-term management plan.

We have strong total cash generation, basic operating cash flow of approximately JPY 500 billion every year, with JPY 200 billion of recycle, totaling JPY 700 billion of cash. You've seen, even with dividend payment, we are generating at least JPY 500 billion to JPY 600 billion cash.

While it is important to recover positive free cash flow, we will focus on shareholder return as well. And with strong financial standing and net DER of less than 1x, I believe it possible to pursue shareholders' return together with investment into our growth strategy.

I have 3 questions. With the introduction of IFRS next fiscal year, general investment will be measured at market value, increasing the equity and decreasing the ROE.

What is your countermeasure? And my second question is on the ROA of 5%.

The target in 3 to 5 years is asset of JPY 10 trillion to JPY 12 trillion, consolidated net profit of JPY 500 billion to JPY 600 billion. Do you believe this ROA of 5% is achievable?

Other trading companies are introducing asset-suppressed measures in their medium-term management plan starting this fiscal year. What is your opinion on this?

And also, going back to the question on dividend, in the current medium-term management plan, you are targeting the 25% as a lower range of dividend ratio, but with this fiscal year, even with the impairment losses recorded, operating cash flow is strong, so considering the net DER, I think the bottom range may be reconsidered. I hope to have your opinion on this matter, please.

We have not officially decided to adopt IFRS yet. If we do, general investment is measured at market value.

Equity will increase in that sense. In terms of our countermeasures as we are often asked, we would like to brief on this point in the management meeting.

However, a part of what you would like to say may be that we may lower the equity in order to increase ROE. But in order to increase ROE, we would like to increase our return.

That is our honest feeling, and we would like that. That is the right thing to do.

For the equity that is on the right, in particular, in relation to LNG for instance, Sakhalin II and other LNG investment shall be appraised. Total of the market value appraisal show we are making profit that meets the level of investment we have made, meaning that other assets did not have high ROE being diluted, so we would like to focus on that and improve the efficiency of our asset.

So focus will be on other assets?

Certainly. LNG has gone up by hundreds of billions.

In terms of profit, we see an adequate level of ROE or ROA, so we assume return in other businesses may be low. So we are thinking to put in place measures to increase efficiency in other businesses.

Second question, whether or not ROA 5% is possible, I believe that is the gist of your question. In preparing the midterm plan, not only PL, but also asset and investment shall be reflected in our view of efficiency, as well as cash flow.

We shall pay attention to all factors to formulate the plan. For the time being, in the long-term business vision, we envisage that JPY 12 trillion, and towards that, we have set out a goal of consolidated net income to be JPY 500 billion to JPY 600 billion.

We have not changed the concept. How we will reach to JPY 500 billion to JPY 600 billion, when the total asset reaches the realm of JPY 12 trillion, it starts to require a lot of man-hours in order to maintain and control the asset of that size.

I believe that there is the limit of our resources. Considering limited human resources and the funds for investment, considering our current borrowings, there is a limit.

So we must think of a way to maximize our profit under the circumstances. We would like to thereby set our goals.

Now the question may be by when. We would like to look closely into the situation and come up with an answer.

Let me answer 2 of your 3 questions. First, the second question, our business in 3 to 5 years' time and regarding 5% ROA.

When we think about the parts that bring us the R, the return, in case of investment, rather than starting in a brownfield, there are a large number of cases where we start from scratch in a greenfield. These investment items fill our pipeline.

In such cases as chemical products, there are electrolyte products and the methanol project with Celanese, as well as VLI in Brazil. The return is to be received going forward.

Gestamp will start showing return going forward, and the same goes with the Cape Lambert Port expansion by Robe River. Preceding investments shall start bringing returns.

There are projects that will come to fruition in fiscal 2015, '16 and '17. So in that sense, as Mr.

Okada mentioned, JPY 500 billion to JPY 600 billion is reachable. And when we consider net DER, et cetera, JPY 10 trillion scale asset size is not too large for us.

We believe we can still increase it by, say, JPY 2 trillion to JPY 3 trillion. Also, cash creation, accompanied by ability to bring more returns, I won't say proportionally but it should be better.

Therefore, including the cash to be directed toward shareholder return, it will be on the rise. That is how we think.

Therefore, rather than trying to contain the growth of our assets, we would like to take on a growth strategy and spend money towards that. As we responded earlier, the investment for investment and shareholder return are 2 things that we shall incorporate in our goals.

That is the concept behind our midterm plan. And this is not the case of only this midterm plan, but the next midterm plan will be combined in achieving improved shareholder return, and I think it is one of the mandate that we are assigned to fulfill.

That is how we understand the situation so far. So for some time to come, we would appreciate if you could wait a while for measures to achieve improved shareholder return.

As we mentioned, it is possible to achieve JPY 500 billion to JPY 600 billion. The new contribution to return from the ongoing projects in the pipeline shall materialize in 2015 and onwards.

It is correct to understand that there will be a leap by JPY 100 billion from the current level, which is a little lower than JPY 400 billion. Expansion of existing projects to which we have increased our investment is now steadily bringing us return.

Contribution made by these expansion projects is larger. Although there will be some new ones, but with the expansion projects, to be honest, JPY 500 billion is reachable.

I would like to know about the shale gas project that may bring higher R of ROE. With Mitsui E&P USA or Mitsui E&P Texas, are showing general tendency of recovery, although there are some one-off events.

When do you think the return will start coming in from the gas project? Will it be next term or do we need to wait until after that?

Please tell us your forecast according to your plan. In addition to that, regarding Cameron LNG, which you are working on in the U.S., please tell us how it's going currently.

That is my first question. My second question is about Sakhalin II.

When you briefed on Russia, you mentioned the project has not yet solidified. Indeed, a high level of free cash flow coming from Sakhalin II project may translate to shareholder return.

What investment projects are you studying and considering now? I would appreciate to have even a small hint.

That is my second question. My third question is about sources of profit going forward.

In the next term, when you look at the short-term view, what will be the contributing factors?

First about shale gas projects, there is Mitsui E&P USA, which operates Marcellus. It turned to the profit side in the second quarter and got much better.

There are some unique factors in this case that is due to a small increase in the gas price and the fact that hedge accounting is not introduced. The mark-to-market loss in the first quarter was turned to positive.

This is a unique situation. The project itself is still in red.

It is actually very difficult to answer from when this project is going to turn to positive. At this point in time, the so-called carry investment completed in July 2012, and there will be no more expenditure.

Depreciation is still ongoing, so there is still slightly negative. I cannot clearly say whether it will turn to positive from next term or not.

However, the shift to the positive is within reach now. Regarding Texas Eagle Ford, as explained, there is a large proportion of liquid, and it is an asset that is making profit compared to others.

Our plan is to make additional investment to increase the number of wells, and that should accelerate the profit. Since it has already turned to profit, we expect it to bring even more profit.

There is still some carry investment left, so there will be some more cash required for investment, but the profit shall grow into the future. Cameron, we are now waiting for the permission to be granted.

[indiscernible] LNG and export are now being prepared. Once the permission is granted, as we are also marketing, we believe we should be able to supply gas with very high level of profit.

As generally said, Cameron will be the next in line?

Well, it is impossible to know. We believe it won't be so far in future.

We are expecting it to be sometime within the year or at the beginning of next year.

Eagle Ford is already in profit, so it is a matter of increasing production to expect even more profit. Now will this happen in the next term?

If we will see an increased profit is unknown. When there is more cash, there will be more investment, resulting in more depreciation.

This shall remain in a balanced state. At the moment, Sakhalin II, we are in discussion with Gazprom regarding its expansion of the third train.

The positioning is that LNG in a variety of the stock and whether or not to launch the third train of production. There has been parallel discussion in Gazprom to a certain extent.

In launching the third train, the volume of gas from Sakhalin II is not enough, and the concern here is how and where to produce Sakhalin III gas and transport it to the site.

The factor to push up profit in the next term, actually there are 2. The case of onetime loss may have no impact on the profit.

Caserones, as mentioned, if operation is started in the next term, it will bring profit. In Mitsui E&P Australia, Vincent FPSO, up to October, for over 6 months, has been under maintenance.

When this returns to its full production, it will also bring profit. Also, for the next term, there are some projects -- as also mentioned by Mr.

Iijima, there are some projects that will complete in the term ending in March 2015. In addition, in Brazil, there's a cogeneration project and some chemical product project.

There will be increase of profit, namely return from greenfield approaches. Image-wise from the next term, profit begins to appear, and from 2 terms later, the profit shall become significant as Mr.

Iijima explained. If the economic landscape stays as is, I believe that understanding is correct.

I would like to ask about iron ore supply and demand, as well as the price for the foreseeable period. My second question is about the progress in investment in first half in the Machinery and Infrastructure, which seems a little slow.

In terms of full year, will it be according to the plan? That is all.

The first question regarding iron ore. Regarding iron ore price, demand in China will be the key.

With a high-level crude steel production in the backdrop, the price is stable. On the other hand, there is much supply and demand gap in steel products, and we cannot be optimistic.

In the short term toward the winter, arrival of cyclone in Australia usually delay shipment or there may be drop in production of ore in China. There are such seasonal factors and, normally, the price is underpinned.

How Chinese government will take initiative in eliminating excess production capacity in China, as well as how to underpin the economy itself is of interest to us. If I may add, even if the price goes down, we have lower-priced product, so drop in the price can be compensated with increased volume.

That is our expectation. Regarding your second question, about progress in investment in Machinery and Infrastructure, in second half, there is a railway project in Brazil and a hydropower generation project in Brazil and acquisition of assets in relation to power generation in Australia.

There are such large projects underway, so we believe the full year forecast will be achieved for the most part.

Let me add to the explanation about the iron ore. Production of crude steel in China from January to September converted to the annualized level.

It is in the level of 785 million ton. Last year, it was 716 million ton.

Import of iron ore exceeds 800 million ton, and this has increased by about 8%. When you look at iron ore demand around the world, it is transitioning steadily according to our foresight, so iron ore supply and demand shall remain relatively tight for some time to come.

Our iron ore has a strong price position, so we show result in the solid profit.

Three questions. First question, I'm afraid it is about Caserones once again.

According to your comment earlier, this project may start contributing once the project is done. I would like to, once again, confirm the background as to why you have recorded impairment loss with expectation of profit materialization.

I would like you to share your view on copper price development in future, according to certain scenario, and the startup timing, please share that with us. How did you make your own decision?

Second point is execution of investment and divestiture. In this term, there are investments, as well as divestiture, have reached beyond their halfway point of their initial full year plan.

In comparison to the ForEx set out at the beginning of the term, it is shifting slightly to yen depreciation. The forecast of total result at the term end is to be materialized?

Or do you have a plan to accelerate it? If ForEx works in favor of the divestiture, how will you materialize the benefit?

The third question is, there has been a comment about trading recovery, in particular in chemical products et cetera. Is the trend likely to continue into the second half or even next term?

What is your view on contribution made by this area of business?

First, Caserones. Background of recording impairment loss is that if we go as far as the level of impairment loss, a certain level of profit will be achieved.

Please understand that impairment loss led to profit rather than there was profit despite of impairment loss. I mentioned briefly about the project period.

In general, project should be completed before winter sets in, in Chile, and the general concern may be, once the winter sets in, it may affect the schedule. Now the copper price going forward, in mid to long term, we believe the demand for copper will continue to grow.

Considering there are less and less high-quality copper mines, the supply may become fairly tight. It all depends on the economy of China, which accounts for about 40% of total copper demand.

We are looking at the copper price situation rather conservatively. Once the project is completed, we are certain that we can enjoy profit.

Now the investment plan and divestiture plan. Out of the JPY 1 trillion, it has come as far as JPY 550 billion.

Yen may be further depreciated, but we believe that, at the term end, we assume the number to double. Divestiture will go a little further, meaning, whereas the plan is JPY 170 billion, the result should be more than that.

In the past, we have been using long or short positions to maximize profit in naphtha and other products. Of course, we did see a profit at one point, but we have reviewed on the approach, and now it is improving.

Worldwide, in particular in case of export from Japan is improving, thanks partly to weaker yen. Profit situation is improving and in terms of the product, methanol did relatively well.

As you also are aware, the world economy is still not so strong and since chemical products are directly linked to the economic state, so we are determined to carry on with cautious operation in this field. In the long run, as mentioned, we shall increase our approaches to new business areas such as the shale gas production in U.S.

to change the trading business model. Regarding steel products, for both domestic and overseas manufacturers, in particular those from Japan, there is very good business with automobile and export, as well as demand of construction materials deriving from the reconstruction efforts.

In the long run, we shall combine our steel business with steel processing to trade with a better term to materialize growth.

I would like to confirm on investment and divestiture. Each item will expand and would the net base be somewhere around JPY 830 billion as in the original plan?

Yes.

I have 3 questions. One, in the full year, what is your forecast on net income?

Forecast for corporate income tax is JPY 25 billion, and as far as PL statement, tax payment is supposed to be lower over time. Please share with us the background, if possible.

My second question, as mentioned, metal resources and approach toward profit in overseas project is what I would like to know. In the first half, you recorded impairment loss to the metal resources and yet achieving the same level of profit.

I assume you are expecting the same level of profit in the second half as in the case of the first half. Will there be any negative impact to the second half due to, say, deteriorated coal market, et cetera?

Or it will continue to be profitable? Regarding overseas resources also, are you anticipating less profit in the second half than the first?

I believe in the first half, there were onetime profit, as well as onetime loss. I would like to know if there is any factor that may lower the profit in the second half?

My third question is about iron ore from Brazil. I see that shipment from Brazil is growing in the past weeks or months.

Has there been elimination of bottleneck in Vale infrastructure? When it comes to shipment situation of iron ore from Brazil, is it growing or is it a onetime event or is the high level of shipment likely to continue?

Please tell us about iron ore shipment from Brazil.

I will answer the second question first. Regarding metal resources, coal price has declined, and we must be fairly conservative in our outlook.

Regarding ForEx, we may not see the yen continue to be depreciated into the second half. Iron ore price in the first half was at a good level, but we have not changed the forecast at the beginning of the term, and please understand that this is an outlook reflecting various factors.

Next, regarding shipment from Brazil, China is beginning to build up on the stock, and Vale is also in the face of increasing shipment. This is not the case of issues with infrastructure in Brazil.

As in your first question, regarding corporate income tax being less than the outlook in the beginning of the term, income before tax is lower, and this tax item includes tax effect related to equity method. And all combined, the result is lower, and thereby, the tax is lower.

Now the time is running out, we can entertain one more question. There seems to be none.

So I would like to end the briefing. Thank you for your attendance.