MITSUBISHI MATERIALS CORPORATION

With global population growth and economic growth accelerating resource depletion and increasing difficulty in waste disposal, moving away from the linear economy model has become an urgent priority. Delayed response to the resource circulation business could result in lost growth opportunities and the risk of exclusion from industry. The Medium-Term Management Strategy (FY2026–FY2028 (ending March 2026 to March 2028)) sets forth a policy of global expansion of secondary raw material smelting and improving the tungsten recycling rate.

Creating high value-added products and solutions through technological innovation is essential to maintaining long-term competitiveness, and neglecting medium- to long-term growth investment could undermine the Company's competitiveness. The Medium-Term Management Strategy sets forth the provision of high value-added products to the aerospace, medical, and semiconductor fields in the Cemented Carbide Tools (Cutting Tools) business, and to the semiconductor, xEV, and healthcare fields in the Electronic Materials & Functional Materials business. The Company recognizes that a temporary improvement in profit margin relying solely on cost reduction will not lead to sustainable enhancement of corporate value.

If safety and health are neglected at manufacturing sites, compliance with laws and regulations and environmental conservation are neglected, or products of substandard quality are supplied, this could lead to legal sanctions as well as damage to corporate value due to a decline in social trust. The Company Group has established SCQDE (Safety & Health, Compliance & Environmental Conservation, Quality, Delivery, and Appropriate Profit) as its priority order in conducting business operations, and has established the "Sustainability & SCQ Promotion Headquarters," headed by the Representative Executive Officer, President, to intensively promote safety, compliance, and quality.

Due to the declining working-age population caused by the falling birthrate and aging population, and the diversification of individual work-style needs, securing and developing specialized talent has become increasingly difficult. Inadequate human resource systems and flexible work-style support measures could lead to lower employee engagement and difficulty in securing the necessary talent. The Medium-Term Management Strategy promotes the "recruitment, development, and placement of strategic talent," "transformation to enhance productivity and capital efficiency," and "building a foundation that generates co-creation and growth."

With the strengthening of policies and regulations aimed at carbon neutrality, if the introduction and tightening of carbon pricing systems (emissions trading, carbon tax) progresses, cost increases corresponding to GHG emissions could affect business performance and financial condition. In addition, response to nature-positive requirements is also being demanded, necessitating business activities that are considerate of the natural environment. The Company Group has set a target of achieving carbon neutrality by FY2045 (ending March 2045) and is promoting the introduction of energy-saving equipment, the utilization of renewable energy, and the development of CCUS technology.

Amid rapid changes in the business environment, insufficient strengthening of development and production technology could result in competitors gaining a technological advantage, leading to a shrinking market share and a weakened earnings base. The Medium-Term Management Strategy focuses on the circular economy and GHG reduction fields, promoting the strengthening of the technological foundation for recycling and GHG reduction and the creation of new businesses through the utilization of open innovation. The Company also works to strengthen on-site capabilities based on autonomization and to develop global engineering talent.

With the rapid progress of digitalization, if efforts do not go beyond the IT-enablement of analog operations to achieve business transformation, the Company's competitiveness could be undermined. The Medium-Term Management Strategy sets forth accelerating the utilization of AI and expanding the effects of MMDX (Mitsubishi Materials Digital Business Transformation), and the Company is promoting the establishment of a globally standardized IT infrastructure and talent development for the future.

Should a failure of important information infrastructure or networks, a cyberattack, unauthorized removal of information, or leakage of personal information due to computer viruses or other causes occur, this could lead to a loss of social trust. The Company is working to strengthen its management foundation through the establishment of globally standardized security and talent development.