December 16, 2003Management

Asahi Glass and Sumitomo To Establish Joint Soda Ash Sales Company

Sumitomo Corporation (President and CEO: Motoyuki Oka) and Asahi Glass Co., Ltd. (President & CEO: Shinya Ishizu) have announced their decision to establish a 50-50 joint venture to sell soda ash, a material used mainly for glass products, in March 2004. Operations are expected to begin in April 2004.

A profile of the new company is as follows:

(1) Company name: Soda Ash Japan Co., Ltd
(2) Office: 1-8-11 Harumi, Chuo-ku, Tokyo
(3) Establishment: March 2004 (scheduled)
(4) Start of marketing operations: April 2004 (scheduled)
(5) Capital: ¥100 million
(6) Shareholder: Asahi Glass: 50%; Sumitomo: 50%
(7) President: To be assigned by Asahi Glass

In 1917, Asahi Glass began manufacturing synthetic soda ash at the Kitakyushu Plant in Fukuoka Prefecture as a material for in-house glass products. Later, it started to produce soda ash for sale. In 2001, the Company suspended domestic production of soda ash to improve overall profitability, and instead began to import natural soda ash from the United States. Since then, it has used imported soda ash for its own glass production and for sale. Sumitomo has meanwhile imported natural soda ash from the United States since 1983 for sale in Japan.

Sumitomo and Asahi Glass have cooperated in operating some of their soda ash import bases. Facing a difficult business environment, the two companies have agreed to establish a joint sales company in a bid to improve their profitability by reducing costs through an integration of their distribution systems and joint procurement.
The new company is expected to become Japan's largest supplier of soda ash, controlling about 30% of the domestic market, with sales likely to total ¥5 billion yen in the initial year.

Soda ash is a common name for sodium carbonate, one of the industrial chemicals. Half of the soda ash sold is used for the production of glass products, while the remainder is widely used by manufacturers of chemicals such as detergents, inorganic chemicals and dyes, as well as by the steel industry. Domestic demand for soda ash, which has been falling since it peaked at 1.4 million tons in 1979, stood at 930,000 tons in 2002. This downturn is attributable to a decline in the production of plate glass amid fewer housing starts and declining demand for glass for cathode-ray tubes as customers continue to shift production overseas. It also reflects weaker demand for beverage bottles given rising use of aluminum cans and PET bottles. Meanwhile, imports of Chinese-made soda ash have been rising in recent years, resulting in lower prices.

Types of Soda Ash
Soda ash is classified into natural and synthetic soda ash. Natural soda ash, which is made principally by processing trona mineral mined in Wyoming, in the United States, contains less chlorine than synthetic soda ash and can be manufactured with simple processes. In contrast, the synthetic soda ash is made from industrial salt by employing a chemical synthetic process.

For details, please contact:
Shinichi Kawakami
General Manager, Corporate Communications Division
Asahi Glass Co., Ltd.
Contact: Kenichi Oda
TEL: +81-3-3218-5408
Keiji Nakajima
General Manager, Corporate Communications Dept.
Sumitomo Corporation
Contact: Masahiko Ueda
TEL: +81-3-5166-3096