ASAHIT h e A s a h i W a y WAY
The Asahi Holdings Group has established the Asahi Way as a set of values for all employees. The Asahi Way is made up of Our Credo, Our Corporate Values, Our Employee Principles, and the Group Code of Conduct. The Asahi Way drives the Group's sustainable growth and improves corporate value over the medium to long term, and directors and management executives take the lead by serving as role models who put it into practice.
Our Purpose | "Totally Committed to | |||
PURPOSE | Protecting the Natural Environment | |||
and Preserving Resources" | ||||
Our Credo | Our Employee Principles | |||
We conserve limited natural resources,preserve the global
Innovate and embrace challenges Put safety first
Contents
environment, and contribute to the realization of a sustainable world.
Our Corporate Values
Cooperation with stakeholders
We constantly seek to earn even greater trust from shareholders, customers, business partners, employees, and local communities as we work to preserve the natural environment.
Corporate governance with a balance of protective and proactive measures
We boldly promote growth strategies and business reform while securing transparency in decision-making and properly managing risk.
No growth without profit
We realize long-term improvement of shareholder value by ensuring the entire group grows and is profitable.
Trusted corporate brand
We aim to be widely recognized as an exemplary corporate group and to build a brand that will be trusted over many years.
Addressing diverse risks
We strive to minimize risks and avert disasters by taking daily safety measures in workplaces and by constantly working to prevent accidents.
Highly motivated employees
We promote work-life balance for employees and continuously improve working environments and conditions.
Strong sense of mission and high ethical standards
Maintain high quality
Promptly report (especially bad news) Build trust and connections
The Asahi Holdings Group Code of Conduct
#1 We comply with all laws and regulations
#2 We respect the dictates of social norms and our own conscience
#3 We treat everyone equally, regardless of age, gender, nationality, race, religion, or other characteristics
#4 We refrain from conducting any political or religious activities in the workplace
#5 We treat customers with sincerity
#6 We practice fair competition and optimal decision-making when selecting business partners
#7 We respect the confidential information obtained through our work and
avoid disclosing it externally
#8 We refrain from providing or receiving meals or gifts in pursuit of personal benefit
#9 We act for the greater good, not for
About Asahi Holdings
STRENGTHS �������������� 02 History of the Asahi Holdings Group…………… 04
Message from the CEO…………………………… 06
Totally Committed to Protecting the Natural Environment and Preserving Resources
The Value Our Business Provides Long-Term Vision, Risks, and Opportunities Looking Back at the Year Ended March 31, 2022 Forecast for the Year Ending March 31, 2023 Pursuing Social Sustainability and Business Expansion Simultaneously
To Our Stakeholders
At a Glance ………………………………………… 14
Value Creation Drivers and Business
Models… …………………………………………… 15
Overview of Asahi Holdings Value Creation Process ���������������� 16 Consolidated Financial/Non-Financial Highlights…………………………………………… 18
Long-Term Vision and Medium-Term
Business Plan……………………………………… 20
Overview of the 9th Medium-Term Business Plan… ……………………………………………… 21
Financial Strategy… ……………………………… 22
Sustainability Strategy… ………………………… 23
Asahi Holdings Business Portfolio
Precious Metals Business … …………………… 24
Environmental Preservation Business … …… 30
Asahi Holdings Materiality ……………………… 36
ESG Initiatives
-
ENVIRONMENT Environmental Initiatives of
the Asahi Holdings Group……………………… 38 Environmental Management …………………… 40 Climate Change Initiatives ……………………… 41 Response to Recommendations by the Task Force on Climate-related Financial Disclosures (TCFD)… …………………………… 42
S SOCIETY
Human Capital to Support Business and Strategy…………………………………………… 44
Initiatives for Responsible Precious Metals Management … …………………………………… 46
Relationship with Society………………………… 48
G GOVERNANCE
Corporate Governance… ………………………… 50
Compliance and Risk Management …………… 53
Director Profiles … ……………………………… 55
Special Feature Roundtable Discussion with Outside Directors…………………… 56
Financial and Non-Financial Data……………… 62
Group Company Structure/
External Evaluations……………………………… 64
Corporate Group Overview/
Share Information… ……………………………… 65
About the Group's Logo
The Group's logo uses a spiral shape as a motif to signify the corporate stance in seeking "environmental preservation through recycling,"
a main feature of its business; the logo also indicates continuity and growth. The arrows pointing upward and downward symbolize Asahi Holdings as an advanced, cutting- edge company. The three colors
of blue, red, and green signify "clean water and sky," "the energy of people carrying out activities," and "beautiful nature and forests," respectively.
We strive to be an organization where employees take pride in their own work and executives maintain a strong sense of mission and high ethical standards.
Being a company of good people
We value good employees over the long term.
Our vision of a "good employee" is a person who is not self- centered and who contributes to mutual prosperity and the development of the business.
personal or affiliated parties' gain
#10 We focus on the actual sites, actual things, and actual facts
Editorial Policy | Report Period | Numbers and Graphs | Note on Future Prospects |
This report provides an overview of the | April 1, 2021, to March 31, 2022 | The figures shown here are rounded off. Due | In addition to past and current facts about |
activities and operations of Asahi Holdings, | Scope | to this rounding, totals may not agree with | the Group, this report includes forecasts |
Inc., with a focus on the company's | the constituent figures shown. | based on strategies, outlooks, and business | |
measures to address social issues through | In principle, this report covers the entire | The Group adopted the International | plans. These forecasts were created based |
its business activities. It has been prepared | Asahi Holdings Group, including Asahi | Financial Reporting Standards (IFRS) in | on information available at the time of |
as a way for the Asahi Holdings Group to | Holdings, Inc., and its consolidated | fiscal 2016, and each reporting item name | writing. Therefore, it is important to note |
communicate with a broad range of | subsidiaries. | basically follows the IFRS guidelines. | that actual performance and results may |
stakeholders and explain the kind of value it | The financial figures for fiscal 2015 are also | differ greatly from any forecasts presented | |
is working to create. By presenting specific | shown based on IFRS. | here, and depend to a large extent on future | |
group activities and initiatives, the report | changes in the business environment. | ||
also serves as a company profile. |
INTEGRATED REPORT 2022 | ASAHI HOLDINGS | 01 |
STRENGTHS
Our Strengths Based on the "Asahi Way"
Innovate and
Embrace Challenges
Putting the "Scrap and Build" Business Approach into Practice
This year marks the 70th anniversary of our company, which was founded in 1952. Since our founding, we have consistently promoted businesses that contribute to the creation of a recycling-oriented society, and we have now developed into a company that operates on a global scale. Looking back on our company's history, our journey has been a series of "innovations and challenges." We got our start recycling silver from photographic fixer, and in 1975, we became the first company in Japan to obtain an industrial waste disposal license from Kobe City, which is a license for detoxifying waste photographic fluid containing hazardous substances. This helped our business to expand nationwide.
Since then, while managing to overcome various difficulties, we have expanded the scope of our precious metals recycling to sectors that also involve handling precious metals other than silver, such as dentistry, jewelry, electronics, and catalysts. At the same time, we've taken on the challenge of creating new businesses. In addition, we have acquired about 20 companies over the past 20 years, primarily in the Environmental Preservation Business. Further, we obtained a North American refining company in a major acquisition, transforming our business portfolio. On the other hand, we did not hesitate to make an early exit from businesses that we determined should not be continued from the perspectives of profitability, growth potential, and synergy. Our withdrawal from the photographic materials business and the Life & Health Business Segment, which remained profitable at the time of withdrawal, are two such examples. Our "scrap and build" approach to business has allowed us to innovate and embrace challenges.
Promoting Business Reform with an Emphasis on Speed
Strengths Our
A Trust-Based
Relationship
with Our Employees
Being a Company of Good People
A trusting relationship with our employees has definitely supported the development of our company. We've gone through a number of phases, starting off as a family-run business focused on personal ownership ("My Company"); then becoming a business focused on communal ownership ("Our Company") that worked with its employees to create new businesses in response to various changes; and finally turning into a publicly listed company with external ownership ("Your Company") that is very mindful of its shareholders and other stakeholders. Throughout this journey, we have maintained a strong sense of purpose and high ethical standards in spreading the "Asahi Way," which summarizes the management philosophy and code of conduct that comprise our traditional values. At the same time, we have actively recruited a diverse workforce with an eye towards future globalization. We have improved compensation through fair and impartial evaluations and a performance-based system. We have also paid attention to job satisfaction and work- life balance, implementing the internal application system and satisfaction surveys, among other changes. Just as "being a company of good people," one of the principles of the Asahi Way, suggests, a group of employees that contributes to mutual prosperity and
the development of the business is the foundation for overcoming difficulties brought about by various changes in the business environment.
8 Factors Supporting Value Creation
Strengths rooted in Asahi's history | ||
Ability to Adapt | Industry-Leading | Highly Motivated |
to Change | Unique Technologies | Employees |
Good Relationships with Stakeholders
Photographic | Hard drive | LCD | South | Precision | Refining | Minting/carbon | |||||||||||||||||||||||
Malaysia | magnetic | PDP | Shanghai | Glass | E-scrap | Taiwan | L&H* | in North | treatment in | ||||||||||||||||||||
materials | materials | indium | Korea | cleaning | America | North America | |||||||||||||||||||||||
Major Business | 1952 | 1994 | 1999 | 2000 | 2003 | 2003 | 2006 | 2009 | 2011 | 2011 | 2013 | 2014 | 2015 | 2019 | |||||||||||||||
Expansions | |||||||||||||||||||||||||||||
Scrap & Build
Major Business
By paying close attention to the business environment and lifecycle and practicing flexible thinking, decisive action, and quick decision-making, we have built original business models and quickly exited businesses in decline. With the ability to respond in this manner, we will continue to maintain growth.
Management Capabilities for Regeneration of Business
We are proud of the original technologies we have developed. These include the following technologies: recovering precious metals with high efficiency and advanced analytical capabilities, properly processing various industrial waste materials, and product development based on accurately ascertaining customer needs. Through constant research and development, the Group continues to enhance its unique technologies in each of its business fields.
Trusted
Asahi Brand
The Group's growth has been driven by our employees, who share the group-wide values of the Asahi Way, deeply value trust and connections, and are motivated by a passion for innovation and embracing challenges. The Group proactively invests in human resources and continues to develop highly motivated employees.
Globally Expanding
Network
We actively engage in dialogue with investors and listen to our customers and business partners to strengthen governance and develop our products and services. We value the mutual trust we have with our employees with the local community and work to increase our long-term corporate value.
Substantial
Market Share
Withdrawals
2011 | 2013 | 2017 | 2018 | 2018 | 2018 | 2020 | 2022 | |||||||
Hard drive | PDP | LCD | Shanghai | Taiwan | Photographic | L&H* | Glass | |||||||
magnetic | indium | materials | ||||||||||||
materials |
* Life & Health Business Segment
Over the past 20 years, we have brought more | The Asahi Group's precious metal products |
than 20 companies into the Group through | are highly regarded throughout the world for |
mergers and acquisitions, and we have | their reliable quality. We are committed to |
improved corporate management. Thanks to | building a trusted Asahi brand by continuing |
our flexible management capabilities matched | to provide high-quality products and services |
to specific business environments, nearly all | in all of our businesses. |
of our companies perform better than they did | |
prior to joining the Group. We will continue to | |
improve performance. |
Since establishing a local subsidiary in Malaysia in 1994, we have expanded into other countries in Asia, including South Korea, China, and Taiwan. In 2015, we acquired a refining business in North America through a merger and acquisition, expanding our target customer base to countries around the world.
Our highest priority is to satisfy our customers and business partners, and we have worked hard to improve our products and services. Our sales and technical capabilities that meet a wide range of needs have earned us the trust of our customers and enabled us to acquire a strong market share.
02 | INTEGRATED REPORT 2022 | ASAHI HOLDINGS | 03 |
History of the Asahi Holdings Group | 3 | 2012 | |||||||||||||
Our 70-year history is one of innovation and challenge. | 1999 | Exchange | |||||||||||||
Act 1 | |||||||||||||||
Over that time, we have developed into a global corporate group | Act | ||||||||||||||
and continue to grow today. | Act 2 | New Development | |||||||||||||
Public Company | 2012 | The Asahi Way established | |||||||||||||
Foundation and | Selected for inclusion in an ESG index by the Tokyo Stock | ||||||||||||||
2015 | Company with an Audit and Supervisory Committee system | ||||||||||||||
1952 | 1999 | Initial public stock offering made on | adopted | ||||||||||||
Early Decades | over-the-counter market | Nominating and Compensation Committees established | |||||||||||||
2000 | Performance-basedstock-option system introduced | ||||||||||||||
Listed on the 2nd Section of the Tokyo | |||||||||||||||
1952 | Asahi Chemical Laboratory founded in Joto-ku, Osaka City | 2002 | Stock Exchange | 2016 | International Financial Reporting Standards (IFRS) adopted | ||||||||||
1964 | Becomes kabushiki gaisha (stock-based company) | Promoted to the 1st Section of the Tokyo | 2017 | Capital increased through new share issue | |||||||||||
Stock Exchange | |||||||||||||||
Fukuoka sales office opens. Sales offices start to be established | The Asahi Way undergoes comprehensive revision | ||||||||||||||
1974 | 2009 | 2018 | |||||||||||||
Asahi Holdings, Inc. established | |||||||||||||||
across Japan | 2022 | Transferred to the Tokyo Stock Exchange Prime Market | |||||||||||||
1978 | Head Office building completed in Higashi-Nada-ku, Kobe City | ||||||||||||||
1997 | Name changed to Asahi Pretec Corp. | 2003 | Automobile catalyst business launched | ||||||||||||
1998 | Headquarters operations transferred to Chuo-ku, Kobe City | 2015 | |||||||||||||
2006 | Asahi Pretec Korea Co., Ltd. established | US and Canadian gold and silver refining subsidiaries | |||||||||||||
Technical Research Center opens in Nishi-ku, | Precious | MetalsPrecious | |||||||||||||
2011 | E-scrap business launched | acquired from Johnson Matthey (UK), and Asahi | |||||||||||||
Kobe City | Refining USA Inc. and Asahi Refining Canada Ltd. | ||||||||||||||
Precision cleaning business launched | established | ||||||||||||||
1952 | |||||||||||||||
Launch of business recycling silver extracted from | BusinessMetals | Business | 2019 | Asahi Refining Florida LLC established | |||||||||||
MetalsPrecious | photographic fixer | ||||||||||||||
1975 | |||||||||||||||
Compact electrolytic silver collection equipment | 2022 | Construction of new plant in Bando City, Ibaraki Prefecture | |||||||||||||
"PLATA" developed | |||||||||||||||
1982 | Precious metals recycling business launched in the dental sector | completed | |||||||||||||
1984 | Precious metals recycling business launched in the plating | 2017 | Nihon Chemitech Co., Ltd. and Ecomax Co., Ltd. | ||||||||||||
1986 | solution sector | integrated into Japan Waste Corporation | |||||||||||||
Precious metals recycling business launched in the electronics | Environmental | 2020 | Asahi Pretec Corp. and Japan Waste Corporation | ||||||||||||
Environmental | components and jewelry sectors | Environmental | |||||||||||||
Business | integrate environmental preservation businesses | ||||||||||||||
Compact electrolytic gold collection equipment "ZIPANG" developed | |||||||||||||||
1994 | ASAHI G&S SDN. BHD. established in Malaysia | 2004 | Nihon Chemitech Co., Ltd. acquired | 2021 | Asahi Pretec merges with Japan Waste Corporation | ||||||||||
1972 | Equipment for detoxification of photographic effluents installed | ||||||||||||||
Business | Business | 2007 | Taiyo Chemical Co., Ltd. acquired | Preservation | and Taiyo Chemical Co., Ltd. | ||||||||||
at the Kobe Plant | |||||||||||||||
Kitakyushu Office of Asahi Pretec Corp. | |||||||||||||||
1975 | Industrial waste disposal license acquired from Kobe City | ||||||||||||||
(detoxification of photographic effluent containing harmful | opened | ||||||||||||||
2008 | |||||||||||||||
Preservation | substances) | Preservation | Japan Waste Corporation established | Business | |||||||||||
businesses other than photographic | Corporation opened | ||||||||||||||
1978 | Registered as an environmental measurement certification office | Fuji Rozai Co., Ltd. acquired | |||||||||||||
1990 | Entry into environmental preservation | 2010 | Yokohama Office of Japan Waste | ||||||||||||
effluents | Ecomax Co., Ltd. acquired | ||||||||||||||||||||||||||||||||||||||||||||
Business Performance | |||||||||||||||||||||||||||||||||||||||||||||
(Billion yen) | Revenue | Operating Profit | (Billion yen) | ||||||||||||||||||||||||||||||||||||||||||
200 | 25.0 | ||||||||||||||||||||||||||||||||||||||||||||
180 | 22.5 | ||||||||||||||||||||||||||||||||||||||||||||
160 | 20.0 | ||||||||||||||||||||||||||||||||||||||||||||
140 | 17.5 | ProfitOperating | |||||||||||||||||||||||||||||||||||||||||||
Revenue | 120 | 15.0 | |||||||||||||||||||||||||||||||||||||||||||
100 | 12.5 | ||||||||||||||||||||||||||||||||||||||||||||
80 | 10.0 | ||||||||||||||||||||||||||||||||||||||||||||
60 | 7.5 | ||||||||||||||||||||||||||||||||||||||||||||
40 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||
20 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||
0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||
1964 | 1980 | 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | [FY] |
Group Holdings Asahi the of History
04 | INTEGRATED REPORT 2022 | ASAHI HOLDINGS | 05 |
Message from the CEO
CEO the from Message
We Have Always Been-
and Shall Remain-
Totally Committed to Protecting the Natural Environment
and Preserving Resources.
Representative Director,
President & CEO
Tomoya Higashiura
Totally Committed to Protecting the Natural Environment and Preserving Resources
This year marks the 70th anniversary of our company, which was founded in 1952. Being "Totally Committed to Protecting the Natural Environment and Preserving Resources" is our company's purpose. This slogan was inspired directly by a submission by one of our employees for an in-house contest we held in 1978. From the company's founding up until that point, our customers had been photo studios and processing laboratories, and our main business involved recovering silver from silver- containing liquids and detoxifying hazardous waste liquids. As we developed our own technologies and expertise, we subsequently
expanded our business domains to encompass a variety of services and products. That being said, there has been no change to our model of keeping our businesses and social contributions inseparable. I have a real sense that an increasing number of people inside and outside the company have come to understand and agree with this model. With "Totally Committed to Protecting the Natural Environment and Preserving Resources" as our lodestar, we will continue to take our company to new heights.
The Value Our Business Provides
Our business activities consist of two mainstays: Precious Metals Business and Environmental Preservation Business. Through these two businesses, we strive to generate both economic value
and social value.
Precious Metals Business
Demand for precious metals is spreading throughout the industrial and investment sectors, and the role of the Precious Metals Business in handling limited precious metal resources is growing more essential. Our Precious Metals Business is divided into two areas: precious metals recycling and precious metals refining. Our precious metal recycling business primarily recovers gold, silver, palladium, and platinum from a wide variety of scrap materials-originating in sectors such as electronics, catalysts (automotive and chemical), dentistry, and jewelry- that contain precious metals to produce high-purity bullion.
The business combines a highly skilled sales force that visits customers in person, with plants that have the expertise and breadth of experience necessary for material recovery. Because raw materials come in a wide variety of shapes, properties, and quantities, our competitive advantage is derived from flexible and creative approaches utilizing our experience, technology, and know-how. We have a leading share in all of these sectors. Our recycled gold and silver are certified by the London Bullion Market Association (LBMA) and our platinum and palladium by the London Platinum and Palladium Market (LPPM), and they are distributed in the global market. In addition, our unique traceability system allows us to prove that the raw materials used in our products do not contribute to environmental pollution, regional conflicts, or human rights issues. This kind of certified gold bullion is referred to as green gold, which adds a premium
06 | INTEGRATED REPORT 2022 | ASAHI HOLDINGS | 07 |
to the value of the bullion.
In 2015, we launched our precious metals refining business in North America. The scale of our refining business is the largest in the world, exceeding 2,000 tons of gold and silver combined per year. We acquired a gold and silver refining business with operations in Utah (U.S.) and Ontario (Canada) from Johnson Matthey of the UK. We also acquired the assets of Republic Metal Corp. in Florida, (U.S.) in 2019, gaining control of minting assets for processing precious metal products such as gold and silver coins. In addition, we will complete construction of a large-scale warehouse in New York State in the U.S. by the end of 2022, which will streamline the distribution of our products. We are in the process of completing a system in which we use the raw materials received from mining companies and the jewelry industry around the world to manufacture high-purity, LBMA- certified gold and silver bullion, just as we do with precious metal recycling, process them into gold and silver products of various forms, and enable optimal distribution and sales around the globe.
Environmental Preservation Business
customers are trying to tackle global warming by streamlining collection and transportation routes or increasing recycling rates, our consulting solutions can help them do so without being restricted to the use of our own facilities.
We hope that customers will see our company as shifting the industrial waste treatment industry toward a knowledge industry. We believe that this will give us a decisive advantage in the industry in the future. The Plastic Resource Circulation Act went into effect in April 2022 as Japan looks to achieve carbon neutrality. From an early stage, we have collaborated with the materials and chemical industries to recycle recyclable used plastics, all without being particular about the use of our own facilities or the framework of the industry. In addition, DXE Inc., which we launched in June 2022, has started a paid service that offers digital management of a series of business processes, from industrial waste discharge to treatment. Our goal is to eventually develop into a platform that proposes the most logical transportation and treatment processes for our customers in terms of CO2 reduction and resource conservation. This will serve as our ultimate goal as we continue to transform the industrial waste treatment industry into a knowledge industry.
CEO the from Message
Our Environmental Preservation Business is engaged in the proper disposal and recycling of industrial waste across the nation. Our nationwide operation is made possible by facilities capable of handling a wide variety of items, a sales force of 150 people located all over Japan from Hokkaido to Okinawa, and our possession of collection and transportation licenses in all municipalities throughout Japan. We also have experience in handling a wide variety of waste materials over a large area, and we not only perform actual disposal of industrial waste at our facilities, but also turn industrial waste disposal management into a source of revenue. Specifically, this means that we present our customers with proposals for an optimal process flow, from collection and transportation to disposal, and then receive fees for these proposals as well as their implementation and management, even if we do not use our own facilities
at all. Companies in the industrial waste industry usually operate out of their own facilities and run their businesses according to their licensed items, capabilities, and location. However, we do our business in an opposite way. We initiate our business according to customer needs. This is what makes our Environmental Preservation Business unique. Whether
Long-Term Vision, Risks, and Opportunities
Since we entered 2022, soaring resource and fuel prices, as well as dizzying fluctuations in exchange rates, have been having a significant impact on the economy. Dependence on fossil fuels and global material procurement are becoming unavoidable risks shared by all industries. That being said, I believe that many business opportunities lie in creating a flow that allows one to evade such risks.
To Be a Leader in Creating a Circular Economy That Connects Society to the Environment
Looking toward the future of human society, we wish to become "a leader in creating a circular economy that connects society to the environment." While this vision will remain constant over the long term, there are two things that we believe we should pursue with care as we explore how the situation will change going forward in the face of recent developments in the domestic and international business environment.
One is that we must take cross-border value chain risks into careful consideration in seeking to expand our Precious Metals Business globally. The second is that we must firmly grasp the changes in behavior of Japanese government and waste generators in the move toward carbon neutrality as we further expand our Environmental Preservation Business.
First, with regard to the issue of international value chains, in light of the tension that has escalated between the United States and China over the last several years, as well as the current conflict between the G7 nations and Russia, it is clear that we cannot grow complacent based on the belief that deepening international interdependence among sovereign nations through trade and direct investment will promote economic development and deter confrontation. While we envision our successful business model in North America expanding to other continents, we will determine our actions based on a firm assessment of the short-,medium-, and long-term risks involved in expanding
into and doing business with new regions.
Second, with regard to the issue of carbon neutrality, waste generators are gradually becoming more cautious about incinerating used plastics. While incinerating biomass does not increase CO2 emissions, incinerating waste plastics and waste oil increases CO2 emissions, and concerns about this have been growing. Moreover, consumption fluctuations due to COVID-19, trade frictions among major powers, and sanctions related to the invasion have caused coal and other fuel prices to skyrocket. This has caused the materials industry and others to seek to secure waste plastics as fuel and raw materials, which has
led to a major intake of waste plastics. We need to adjust our businesses in line with these new trends. We are confident that this is a transition phase in which we can leverage our bird's- eye view of industrial waste management as a source of profit.
Resource Recycling That Mitigates the Risks of Dependence on Fossil Fuels
We believe that there will be increased opportunities within the resource recycling business if we face the risk of fossil fuel dependence head-on, especially in the context of heightened geopolitical risks. One of the real-life consequences of Russia's invasion of Ukraine was a sharp rise in the price of natural resources, including the precious metals we handle. In particular, the price of palladium, of which Russia is the largest primary producer, leaped by approximately 1.5 times in a few months from the beginning of 2022. While the situation is critical for industries including medical care that use palladium, our ability to recycle rare metal resources has played a
major role by serving as a buffer. The amount of palladium we recycle annually is equivalent to about 10% the amount of palladium Russia exports to the rest of the world in a single year. Depending only on resources from primary mines would surely have sent prices soaring even higher, causing panic in the auto industry and other related industries around the globe. We can also learn from history that sanctions can trigger major military conflicts. Having completely local recycling operations alleviates the issue of dependence on imported resources. Behind our company's purpose of being "Totally Committed to
Protecting the Natural Environment and Preserving Resources" is the preservation of world peace.
Turning Risks into Opportunities
Due to the global spread of COVID-19, material procurement risks have become apparent in a number of industries. Our operations in Japan and Asia are relatively regionally self- contained, and while we faced severe difficulties in some sectors due to customers' production activities stalling, there were no major obstacles in terms of our own operations.
However, our North American business uses European- made equipment for some of their production facilities, and when that equipment broke down, it took a great deal of time to import repair parts and perform on-site repairs, which caused extended production downtime. Moreover, the residue generated during the refining process at the plant contained a small amount of precious metals, so recovery of precious metals from this residue had to be outsourced to a smelter. We used a major smelter in Italy, but lead times were significantly extended due to the slowdown in sea transport and the lack of local workers.
With regard to the production equipment made in Europe, we continue to use it, but we have concluded a new maintenance contract with a local electrical equipment company at our plant and established a system that allows us to deal with product breakdowns almost completely locally. This allows us to recover from breakdowns more quickly than before the COVID-19 pandemic. In terms of outsourcing to smelters, we have decided to bring the smelting function in-house within our Salt Lake City plant to reduce our dependence on outsourcing. It was for this reason that I myself decided on making a phased investment while at the Salt Lake City in April. The smelting function is a rarity in the North American region, and we made an immediate decision to transform a risk into an opportunity, with the aim of developing the combined smelting and refining business into a new service for external customers. We will create a management structure that retains the advantage of freely utilizing resources dispersed around the globe while preparing contingencies in case this rapidly turns into a risk in terms of business continuity.
08 | INTEGRATED REPORT 2022 | ASAHI HOLDINGS | 09 |
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Asahi Holdings Inc. published this content on 21 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2022 04:49:04 UTC.