NIPPON MINING CO., LTD. History
Telephone: (03) 3 505-8111
Fax: (03) 3 505-8094
Incorporated: 1905 as Kuhara Mining Company
Sales:&¯p;yen;718.13 billion (US$5.29 billion)
Stock Index: Tokyo Osaka Nagoya Frankfurt New York
Nippon Mining Co., Ltd. is one of the leading copper mining companies in Japan, although 55.6% of its total sales came from its oil division in 1990. The company has diversified rapidly into special petrochemicals, biotechnology, and pharmaceutical products, and has recently established a copper foil manufacturing subsidiary in Hong Kong.
The Kuhara Mining Company, predecessor of the Nippon Mining Co., Ltd., was established in 1905 by Fusanosuke Kuhara as a copper mining venture located in Hitachi village--now Hitachi City. As a result of rapid expansion, Kuhara decided to reorganize his enterprise into a joint-stock company, with a capital of ¥10 million, in 1912.
Although the major business of the company was copper mining, Kuhara perceived that Japan had an energy supply problem, and he secretly began to look for opportunities for oil field development. In March 1914, the Nippon Oil Company located an abundant oil field, the Kurokawa well in Akita Prefecture, and the sudden oil price rise during World War I further stimulated Kuhara in his search for oil. He began to explore domestic oil fields after 1914, and built eight oil well development offices between 1916 and 1917. He also explored oil fields in northern Sakhalin, Borneo, Burma, and Malaya. In 1919, he entered into a joint venture with a Russian company to develop oil fields in northern Sakhalin. In 1921, this joint venture discovered a potentially rich oil field, but the Japanese Ministry of Foreign Affairs and other oil companies hoped to develop it as a national project. In 1919 the Ministry of Agriculture and Commerce established a joint stock company named Hokusin Kai, which later became Kita Karafuto (Northern Sakhalin) Oil Company. It was co-owned by Kuhara Mining, the Mitsui and Mitsubishi zaibatsu, Nippon Oil Company, and others.
During World War I, Kuhara Mining Company continuously expanded its business. However, after the war economic conditions deteriorated and the company met financial difficulties. After 1920, Kuhara's business made losses and incurred a huge amount of debt. When Kuhara retired from the business and went into politics, his brother-in-law Yoshisuke Ayukawa took responsibility for the reconstruction of the company.
In March 1928 Ayukawa became president and in December he reorganized Kuhara Mining Company into a holding company, Nippon Sangyo (Industry) Co., Ltd. In April 1929 the mining and refinery division was separated and established as a independent company named the Nippon Mining Co., Ltd. with a capital of ¥50 million. Ayukawa then became chairman of the board and Masahiko Takeuchi became president.
After 1916 the company further explored the Akita oil field but failed to locate oil. Finally, however, in September 1933, a rich oil field--the Omonogawa oil well--was found. In 1936 and 1937 two further oil fields were found in Hokkaido. In 1934 a natural gas field was developed in the Tsutong area of Taiwan, where the company established natural gas and naphtha refining facilities.
In 1939, the company began to construct an integrated oil refinery plant to produce aviation gasoline at the request of the Japanese navy. However at the outbreak of the Pacific war in December 1941, construction stopped. In the late 1930s, Nippon Kogyo acquired two oil refining companies and strengthened its oil refining division in the Akita area. However, in 1942 Teikoku Sekiyu (Empire Oil) Co. Ltd. was established as a state-owned company, and the Tsutong plants and Omono River oil wells' refining facilities were transferred to Teikoku Sekiyu.
In August 1945 the Pacific war of World War II ended, and Japan lost its former territories and occupied areas. Nippon Mining Co., Ltd. lost its foreign assets located in those areas, which had amounted to almost 40% of its total assets in 1943. After the war, the company's major plants were Hitachi mining works and the Sagaseki refining facility, but production was down to almost nothing at the end of the latter half of 1945. At the end of 1946, production recovered to one-third of the volume of wartime production, but the only active production facility was the Funagawa oil refinery. In 1946, the Funagawa refinery refined 56,483 kiloliters (kl) of crude oil and produced 53,794 kl of gasoline and other products.
In 1947, the Funagawa refinery converted from munitions manufacturing to civil use, and began to make solvent products and to diversify its product line. By 1951, the Funagawa Refinery had lubrication oil production facilities, and established an integrated oil refinery system. Until June 1961 Funagawa refinery was Nippon Kogyo's only active modern refinery facility.
The Allied powers prohibited the rebuilding of oil refinery facilities on the Pacific coast, but lifted the prohibition in 1950. The Pacific coast of Japan became a good industrial location for the reduction of transportation costs and stimulation of import-export activities. As Nippon Mining had no refinery facilities on the Pacific coast, establishing a presence in this industrial zone became a strategic target for the company.
After 1955 the executives of the company realized that the Mizushima area in Okayama Prefecture would be an attractive site for a refinery complex. In 1958 the company started a feasibility study for the project. Construction began in July 1960, and the Mizushima complex was in operation from June 1961. The Gulf Oil Corporation played an important role in the building of the Mizushima refinery complex, both in the supplying of finance and in the export of crude oil. In May 1960 secret transactions had been held in the Tokyo office of Gulf Oil Corporation; the agreement to a US$15 million (¥5.4 billion) loan to build facilities and a ten-year contract for the import of a total of eight million barrels of crude oil were signed in September 1960.
In June 1960 the Japanese government decided to liberalize crude oil imports--although processed oil imports to Japan, such as gasoline, were still restricted--and from October 1962 carried out the liberalization in stages. However, to prevent over-production and excess competition between oil refineries, the Ministry of International Trade and Industry (MITI) implemented the Oil Industry Law. By this law MITI maintained control of the Japanese-owned oil and petrochemical industries. The Nippon Mining Co. established a joint sales company, Kyodo Oil Company Ltd., with Asia Oil Company, Ltd. and Toa Oil Company Ltd. under the administrative guidance of MITI. The Nippon Mining stake was 34%, and those of Asia Oil Company and Towa Oil Company, were 23% each, while the remaining 20% was owned by banks. A vice president of Nippon Mining, Kazuo Hayashi, was appointed as president of Kyodo Oil Co. Kyodo Oil Co. united the oil tank yards and sales agencies of the three companies, and went into operation in July 1966.
Kyodo Oil Company's market share was 10.9%, and the company held third position in the domestic market, after Nippon Oil Company in first place, and Idemitsu Kosan in second. Nippon Mining dispatched 643 employees to Kyodo Oil Company to sustain sales activities temporarily, but by December 1966 almost all those dispatched had become permanent employees of Kyodo Oil Company. As a result of these arrangements, Nippon Mining's oil division became a de facto refinery division of Kyodo Oil Company. Thus a close relationship between Nippon Mining and Kyodo Oil Company was established.
Through the development of the Neurex processing system the company entered into the area of petrochemicals, launching a synthetic detergent product in November 1967. To further its diversification into petrochemicals, the company established Nikko Petrochemical Co. Ltd. in December 1967.
After the mid-1960s, the company built a petrochemical complex in Mizushima with Asahi Kasei Industry Company Ltd. In July 1968, Nippon Mining--with a stake of 20%--and Asahi Kasei--with a stake of 80%--jointly established Sanyo Petrochemical Company Ltd., with a capital of ¥750 million, to supply olefin gas to the complex, Sanyo Petrochemical Co. and Mitsubishi Kasei Industry Co. Ltd. established Mizushima Ethylene Co. Ltd., a 50-50 joint venture, to decompose naphtha. In November 1969 another jointly owned company, Sanyo Ethylene Co. Ltd., was established. Consequently, Nippon Mining's Misushima refinery became the central raw material and energy supplier of the petrochemical complex.
The company also began to pursue backward integration into oil drilling. In December 1967, Nippon Mining Co., Maruzen Oil Co., and Daikyo Oil Co. jointly invested in offshore oil drilling in Abu Dhabi and established the jointly owned Abu Dhabi Oil Company Ltd. with equal stakes of 33.3% and capital of ¥600 million. By January 1971 there were four oil wells producing crude oil, and in May 1973 production reached a level of 40,000 barrels per day (b/d).
In September 1967 Nippon Mining established a joint venture company, the Petro-Coke Company Ltd., with Continental Oil Company of the United States and Sumitomo Shoji Co. Ltd., with a capital of ¥360 million. In 1969 this company began production of calcined petroleum cokes. As a result of expansion in the oil division, Nippon Mining began production at a lubricating oil factory in the Chiba Prefecture in May 1969.
The two oil crises in 1973 and 1978 stimulated the reorganization of the Japanese petroleum industry including petrochemical production. In 1979 Nippon Mining acquired the Toa Kyoseki Company Ltd. from its parent companies, Chu Ito & Company and Toa Oil Company Toa Kyoseki Co. was a relatively small refinery with a processing capacity of 100,000 b/d, established in 1973 under the guidance of MITI. It was in financial difficulties after the first oil crisis. Under the management of Nippon Mining, Toa Kyoseki changed its name to Chita Oil Co. Ltd., with a capital of ¥6 billion. Nippon Mining's stake was 61.67%, Kyodo Oil Company 33.3%, and Chu Ito & Company 5%. Chita Oil Co. contributed to the strengthening of the tie with Nippon Mining's oil division and the Kyodo Oil Company group. However, after the second oil crisis, with its unsettling influence on the business environment, Chita Oil Co. was fully integrated into Nippon Mining by permission of MITI, in July 1983.
After the second oil crisis the demand for petroleum declined, and the company restricted its crude oil refinery capacity at its three oil factories. As a result, Nippon Mining's crude oil refining capacity was 281,000 b/d in 1983--Mizushima 190,000, Funagawa 6,000, and Chita 85,000,--a capacity almost unchanged until 1989.
In March 1985 Kyodo Oil group companies jointly established a research and development center for the development of oil products. In the following April, the management of the lubricating oil products research laboratory at Nippon Mining was transferred to the newly established Kyodo Oil group's research and development center.
In 1990, Nippon Mining Co., Ltd. was capitalized at ¥63.4 billion. To achieve further growth, the company is promoting oil prospecting projects with Conoco and planning a full-scale launch into polypropylene and special resins. Although 55.6% of total sales came from the oil division in 1990, traditional divisions such as copper (15% of sales), metal products (7%), zinc (4%), gold (7%), and silver (1%) still represent a large portion of total sales and profits, as do the new materials division (4%), and new ventures--including biochemicals (4%)--are expanding. The Nippon Mining Co., Ltd. is one of the most successfully diversified companies in the mining and petroleum industry in Japan, and will reinforce its status as a multi-divisional and multinational company in the next decade.
Principal Subsidiaries: Nikko Shoji Co. Ltd.; Nikko Consulting and Engineering Co. Ltd.; Toyoha Mines Co. Ltd.; Tomakomai Chemical Co. Ltd.; Nikko Liquefied Gas Co. Ltd.; Nikko Oil Sales Co. Ltd. (51%); Nippon Marine Co. Ltd. (98%); Nippon Mining (Bermuda) Ltd.; Chita Oil Co. Ltd.; Nikko Zinc Co. Ltd; NMC Finance Co. Ltd; Nikko Exploration and Development Co. Ltd.; Toranomon Tower Building Co. Ltd. (95%); Cactus Kasei Co. Ltd. (92%); Nikko Petrochemical Co. Ltd.; Petrocokes Ltd. (70%); Nikko Gould Foil Co. Ltd; Nippon Mining U.S. Inc. (82%); Gould Inc.; Kyodo Oil Co. Ltd. (47%); Abu Dhabi Oil Co. Ltd. (26%); Sanyo Petrochemical Co. Ltd. (40%); Nikko Real Estate Co., Ltd.; Central Computer Service Co., Ltd. (65%); Orient Catalyst Co., Ltd.; Kyodo Oil Technical Research Center Co., Ltd. (57%); Nikko Corrosion Engineer Co., Ltd.; Nikko CS Chemical Co., Ltd.; Nikko Metal Plating Co., Ltd.; Nikko Petroleum Exploration Co., Ltd.; Fuji Electronics Co., Ltd. (92%); Nikko Building Materials Co., Ltd.; Automax Co., Ltd. (80%); Nikko Coupler Co., Ltd.; Nikko TAB Inc.; NMC Resources Engineering Co., Ltd.; NMC Pearl River Mouth Oil Development Co., Ltd. (50%); Japan Encore Computer Inc. (50%); E.A.I. Electronic Associates (Japan) Inc.; Nikko Wolverine Inc. (U.S.A.); Nippon Mining Singapore Pte. Ltd.; Nippon Mining of Australia Pty. Ltd.; NIMIC INC. (U.S.A.); Nippon Mining (New York) Inc. (U.S.A.) Nippon Mining of Nevada Ltd.(U.S.A.); Irvine Scientific Sales Co., Ltd. (U.S.A.) (88%); Nippon Mining (Taiwan) Ltd.; Contact International Corp..
- Nippon Mining Co. Ltd., Mizushima Refinery, Mizushima Seiyu sho 20-Nen no Ayumi, Nippon Kogyo K.K., 1984.
- Ministry of Finance, Yukashoken Hokokushyo Soran, Tokyo, Ministry of Finance Printing Division, 1983-1989.
- Toyo Keizai, ed., Kaisha Shikiho (Quarterly Handbook of Japanese Public Companies), Tokyo, Toyo Keizai Sha, 1950-1990.
- Okabe, Akira, Sangyo no Showa Shakai Shi, No.3 Sekiyu Tokyo, Nippon Keizai Hyoron Sha, 1986.
Source: International Directory of Company Histories, Vol. 4. St. James Press, 1991.