March 9, 2012
Sumitomo, Mitsui to consolidate Japan fertiliser businesses
Mitsui & Co. and Sumitomo Corp. Thursday (Mar 8) said they will integrate their Japan fertiliser businesses and raw material importing operations, hoping to work together to tap global growth as their domestic market shrinks.
In a move that may bring about Japan''s second largest fertiliser company, the two trading firms aim to set up a 50-50 joint venture with annual revenue of JPY75 billion (US$919 million) by this autumn.
Japan''s annual demand for fertiliser has fallen to 2.5 million tonnes from three million tonnes over the past decade, as more and more people abandon farming, said Akira Umeoka, General Manager of Sumitomo Corp.''s Fertiliser Division.
Sumitomo Corp. produces and sells fertilisers mainly in Hokkaido and Kyushu, Japan''s northern and western islands, while Mitsui & Co. mainly sells feed stock raw materials and fertilisers to producers and wholesalers.
"We decided that we need to look beyond company lines in order to keep competing," Umeoka said at a joint press conference. "This will result in good synergy."
Mitsui & Co. and Sumitomo Corp. have cooperated since March 2010 in importing raw materials for fertiliser, as prices of the main raw materials required such as nitrogen, phosphate and potassium, have been rising amid growing global demand.
After completion of this integration, the two will discuss the possibility of expanding the scope of their cooperation to their respective overseas fertiliser businesses such as production of raw materials and sales of finished products, said Kenichi Kitajima, General Manager of Mitsui''s Fertiliser Division.
Global demand for fertiliser has been rising by 3% on year as the world''s growing population spurs demand for food, Umeoka said.