PDF Version - Hitachi Metals · 2015. 9. 30. · Exhibitions / New plastic mold steel HPM-MAGIC® received the Best 10 New Products Award’s "Monodzukuri Prize" / Metglas, Inc. contributing

CSR Repor t

PDF Version

Hitachi Metals Corporate Philosophy Code of Conduct for Hitachi Metals Group Companies

Enhancing Awareness of Social Responsibility and Corporate EthicsAdhering to the principle of "Obey the law and walk the path of virtue," we will develop our corporate activities in an ethical manner, with full grasp of our social responsibility and the potential effects of our corporate activities. As we conduct business on a global scale, we will comply with all relevant international conventions and the laws of each country, while striving to understand each country's local religions, cultures and customs in order to contribute to regional economic development.

Pursuing Mutual Growth with our Business PartnersWith the aim of generating the highest possible customer satisfaction, we will engage in the development of unique basic technologies and new technologies that empower us to continue providing high quality, reliable products. In achieving this aim, we will conduct fair and appropriate business transactions with our suppliers.Based on an awareness of social responsibility shared jointly with our business part-ners, we will carry out corporate activities to realize mutual growth.

Promoting Truthful Communication with SocietyWe will disclose appropriate corporate information in a timely, fair and transparent manner to our shareholders and other stakeholders. At the same time, we will endeavor to establish a relationship of mutual trust with society through well-coordinated two-way communication.

Thinking about Our Next Generation - An Environmentally Friendly SolutionRecognizing the importance of protecting the environment, we will ensure effective and environmentally conscious utilization of limited natural resources in order to bestow a clean environment to the next generation.Through creation of new products and businesses that bring new value to society, we will base our sustainable growth on the provision of high quality products in harmony with the environment.

Fostering the Welfare of Employees and SocietyWe will create a safe and ideal workplace, embracing the great diversity of our individual employees and their capabilities, while promoting their personal develop-ment through work. As a good corporate citizen, we will continue efforts to contribute to society through sincere, nondiscriminatory corporate activities based on mutual trust with all members of society.

Formulated July 26, 2006

demonstrating environmental burden exceeding its standards for disclosure. This accounts for about 98% of the environmental burden created by the Hitachi Metals Group overall.Company names and related particulars are current as of March 31, 2010.

●PeriodThis report essentially covers fiscal 2009 (April 1, 2009 through March 31, 2010).

●Underlying Guidelines"Environmental Reporting Guidelines" 2007 Edition, the Ministry of the Environment, Japan"Environmental Performance Indicators for Businesses" 2002 Edition, the Ministry of the Environment, Japan"Environmental Reporting Guidelines 2001-With Focus on Stakeholders," the Ministry of Economy, Trade and Industry, Japan"Sustainability Reporting Guidelines 2006," Global Reporting Initiative

●Purpose of PublicationThis report is published with the aim of acquainting readers with the Hitachi Metals Group’s view towards corporate social responsibility (CSR). Disclosing examples of its daily business activities in a reader-friendly manner, the Group hopes that this report will serve as a valuable tool for communicating with its stakeholders.This report introduces the scope of Hitachi Metals Group management activities to its broad spectrum of stakeholders.The contents include corporate governance and compliance structures, as well as its product development and monozukuri activities that significantly contribute to the creation of a recycling-oriented society. Through disclosure of such information, the Group aims to broaden and deepen conversations with the global community, while diversifying the scope of corporate activities.Detailed information can be found on the website.

●ScopeThis report covers 76 companies of the Hitachi Metals Group (the Group) consisting of Hitachi Metals, Ltd. (the Company) and its Group companies (65 consolidated subsidiaries and 10 equity-method affiliates). The scope of environmental data includes data for the 49 companies within theGroup

Note on the Corporate Social Responsibility Report

Editorial Policy

For detailed information, please seehttp://www.hitachi-metals.co.jp/e/corp/corp14.html

We aspire to contributing to society by cre-

ating "the best possible company" based

on harmony among people with affection

for our company - a goal to be pursued by

drawing on its more than 100-year history,

by ensuring that our mainstay products

lead their industries in both quality and

quantity, and by applying ourselves to the

advancement of technology.

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Top Message

Corporate Governance


Hitachi Metals Group CSR


Personal Information Protection / Information Security Initiatives

Feature Group Discussion

Social Repor t

In Cooperation with Society and the Local Community

[Harmonious Coexistence with the Local Community]Community Cleanup Activities / Sponsoring and Supporting Sporting Events / Other Activities

[Preservation of Historic Sites and Traditional Culture]Preservation of Historic Sites and Traditional Culture

[Pursuing Mutual Growth with our Business Partners]With Our Customers / With Our Suppliers

[Fostering the Welfare of Employees and Society]With Our Employees

[Promoting Truthful Communication with Society]With Society, Including Our Shareholders and Investors

Hitachi Metals Factory Tour

Environmental Report

Medium-to-Long-Term Environmental Strategy / Environmental Objectives, Targets, and Results

[Eco-Management & Eco-Mind]Hitachi Metals Group Basic Environmental Protection Policies / Hitachi Metals Group’s Environmental Management / Environmental Auditing / Environmental Education and Awareness Promotion / GREEN 21

[Environmental Accounting]

[Eco-Products]Environmentally Conscious Vision for Products and Services / Expansion of Eco-Products / Participating in Exhibitions / New plastic mold steel HPM-MAGIC® received the Best 10 New Products Award’s "Monodzukuri Prize" / Metglas, Inc. contributing to reduce CO2 emissions / Ring material for CVT belt / Diesel Particulate Filter / Epoch PaNacea Series / FINEMET® EMC and Noise Reduction Components / Amorphous Metal - Metglas® 2605SA1 / Neodymium (Nd) sintered magnet NEOMAX® / HERCUNITE®-S Heat-Resistant Cast Steel for Engine Exhaust Parts / Eco Galvanized Cast Iron Pipe Fittings / Hitachi Oil Chain

[Eco-Factories]Material Balance / Global Warming Prevention / Reducing Waste / Reduction of Substances of Environmental Concern / Site Data

Third Partys’ Opinion

Economic Report /Corporate Data

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Thank you for taking the time to look at the Hitachi Metals Group’s 2010 CSR Report. The Hitachi

Metals Group, as a manufacturer with advanced technological development capabilities, and in accor-

dance with its corporate philosophy of "contributing to society by creating 'the best possible com-

pany,'" has implemented measures in keeping with the needs of the times. This is the embodiment of

our corporate social responsibility (CSR) activities.

This report presents the Hitachi Metals Group’s CSR activities as a member of society.

Guided by the five principles in our corporate Code of Conduct,we will adapt to the global era and contribute to society.

President,Chief Executive Officer

and Director

Hiroyuki Fujii

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circumstances. The Action Plan in the "Fiscal 2012 Medium-

Term Management Plan" formulated in April 2010 was cre-

ated based on just such principles for conduct.

Safety is the foundation for corporate activity, and must be a

priority above anything else. We deeply regret that in Sep-

tember 2009 a major accident at our group company Hitachi

Metals Wakamatsu, Ltd. resulted in the death of an em-

ployee. Ensuring that such an accident does not happen

again remains foremost in our mind, and with an understand-

ing of the risks of a major accident inherent in everyday work

operations, we are making fundamentally revisions to work-

place safety. We will continue to maintain an unwavering

commitment to safety activities.

Consideration for the environment is essential for a company

to achieve sustainable growth. The Hitachi Metals Group

employs a dual approach to environmental issues that

incorporates both offensive and defensive measures. The

offensive approach is the development of new products that

meet environmental needs. Some of Eco-Products developed

by the Hitachi Metals Group up to now include HERCUNITE®,

along with materials for magnets and amorphous metals. We

will continue to utilize the advanced technologies in energy

efficiency we have acquired to develop even better products.

The defensive approach is employing realistic environmental

st rategies. Current ly , the volume of CO2 and other

greenhouse gasses emitted by the Hitachi Metals Group (in

Japan) accounts for one third of all such emissions from the

Hitachi Group (in Japan). This is an extremely large figure,

and improving this situation is an immediate concern. Our

initial efforts to reduce CO2 have focused on measures for

process innovation. In 2009 Japan announced to the

international community its medium-term goal of reducing

greenhouse gas emissions by 25% from 1990 levels by

2020. Government policies are currently being implemented

to achieve this goal. The Hitachi Metals Group is contributing

to society by acting in line with such measures. In addition to

reducing, we are of course also taking proactive steps to

The Hitachi Metals Group has since its founding continually

developed its business under its corporate philosophy of "con-

tributing to society by creating 'the best possible company.'"

The "Code of Conduct for Hitachi Metals Group Companies" is

the fundamental embodiment of this corporate philosophy. Its

five principles for conduct are psychological supports indicat-

ing the path for the Hitachi Metals Group to follow. It is impor-

tant that all employees fully understand these principles, and

it is our goal as a corporate group to cultivate personnel able

to put them into practice.

"Globalization" has become a watchword for the times, and as

it advances the importance of conducting business with

others around the world has grown. There is a need for per-

sonnel who understand the business customs and cultures of

peoples around world, and who act in accordance with a

strong ethical sense and self-discipline.

The business environment is also in the midst of dramatic

changes. The scope of corporate responsibility for managing

behavior has expanded beyond its own actions to include that

of the partners with which it works.

The important aspect here is not to focus on individual mat-

ters, but to have a comprehensive understanding, and con-

duct business based on principles for conduct that fit with the

The "Code of Conduct for Hitachi Metals Group Companies" is the starting point for all activities

Safety is our first priority in all aspects of business

Dual approach to environmental issues

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eral manager , I was keenly aware of the importance of

improving the work environment and maintaining employ-

ment. Even amid the current advance of globalization, Hita-

chi Metals will remain a company with the technological

capabilities to ensure its main production centers remain in

Japan, utilizing production technologies only possible in

Japan. Exploring ways to accomplish this, and perpetuating

the manufacturing industry in Japan, will benefit stakehold-

ers. Corporate earnings are derived first and foremost

through communication with society, and we believe that

efforts to give back to the community to be the social

responsibility of a corporation.

The perception of value in the corporation changes with the

times. The Hitachi Metals Group makes a continual effort to

respond flexibly to the demands of the era, and to be a com-

pany trusted by all stakeholders. The creation and publishing

of this CSR Report is one of the important tools for ensuring

communication with society. Beginning with the 2009 report

the CSR Report has mainly been made available as an online

PDF version, with the Hitachi Metals Group’s 2010 CSR

Report a digest version condensed to its essential elements. I

feel that this allows us to express the Hitachi Metals Group’s

measures to readers in an easy-to-understand way. Thank

you for your continued support and guidance in helping us to

achieve mutual growth.

address other issues, such as reducing amounts of industrial

waste.

Hitachi Metals considers its stakeholders to include the local

communities where its offices are based, along with all its

business partners. We have helped support community

sporting events such as the Kumagaya Sakura Marathon

(Kumagaya city, Saitama Prefecture) and the Junior High Vol-

leyball Invitational Tournament (Tottori city, Tottori Prefec-

ture), and have actively sought communication with local

residents. We plan to continue these measures regardless of

the economic circumstances.

From an even broader perspective, we believe that maintain-

ing a domestic manufacturing base and generating employ-

ment in Japan to be a social contribution we make through

our primary business operations. When I was a factory gen-

July 2010

Contributing to society through our primary business operations

The CSR Report ensures communication with society

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The underlying basis for corporate governance at Hitachi Metals is to ensure transparent and efficient management, meet the needs of our stakeholders, and increase corporate value. We believe this to be one of our most important management challenges.

Accordingly, it is imperative that we create an organizational structure in which management oversight and business operations function effectively and in balance. We also believe that timely, high-quality information disclosure contributes to the improvement of corporate governance. In pursuit of this philosophy, we go beyond simple financial disclosure, regularly publishing the details of indi-vidual business segments and mid-term management plans.

We acknowledge that compliance is the linchpin of corporate governance. Consequently, our corporate activities go beyond mere compliance with laws and internal regulations: they also respect social mores and ethics, and recognize our role as a member of society. We established the Code of Conduct for Hitachi Metals Group Companies, which reflects this stance with specific standards of conduct for company executives and employees.

Our compensation plan for directors and corporate officers reflects short-, mid-, and long-term corporate performance. The compen-sation of directors and corporate officers is tied to the increase in corporate value and the benefits provided to our stakeholders, which directors and corporate officers achieve by proposing, establishing and executing management policies, midterm plans, and fiscal-year budgets from a mid- and long-term perspective.


C o r p o r a t e G o v e r n a n c e

Corporate Governance Structure

More detailed information on corporate governance at the Hitachi Metals Group is provided in the Report on Corporate Governance.

General Meeting of Shareholders

Board ofDirectors

Executive Officer(President)

Accountingaudit

Appointment /dismissal

Direction and orders

AccountingAuditor

Proposal to appoint /dismiss directors

Audit of exercisefunction

Compensation decisions

NominatingCommittee

Audit Committee

CompensationCommittee

Board ofDirectors

OfficeCSR Management Office

Internal Auditing OfficeBusiness audit(Internal control function)

Business Divisions

InternalCompanies

CorporateCommunication

Risk management

ExecutiveCommittee

Internal controlfunction( )

Supervisory andcontrol functions

Supervisory and control functions

Promoting compliance

Supervision of exercise function and appointment / dismissal of executive officers

Proposal to appoint /dismiss accounting auditors

Appointment / dismissal of

directors

Upgrading internal control systems


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C o r p o r a t e G o v e r n a n c e

Internal Control SystemHitachi Metals has developed the following internal control system.

1. An Executive Committee consisting of all executive officers has been formed to ensure that the business activities of executive officers comply with laws, regulations and the Company’s Articles of Incorporation, and are carried out efficiently. Significant business issues that have an impact on the entire company are deliberated by this committee, with the decision made by the executive officer responsible.

2. A Compliance Office has been established in the CSR management office, which designates a manager responsible for the Company- wide compliance system.

3. A CSR Management Office has been established to facilitate a Company-wide approach to compliance, social contributions and corporate social responsibility.

4. A Compliance Hotline has been established for employees at Hitachi Metals and Group companies, when encountering situations that violate laws or Company regulations, to report facts of such incidents that through a specified channel without fear of reprisal. This system ensures early discovery and correction of misconduct.

5. An Internal Auditing Office under the direct control of the president has been established, which conducts internal audits of business divisions and Group companies to ensure compliance with laws, regulations and internal rules, as well as the efficiency of their business activities. The results of internal audits are reported to the president and the Audit Committee to confirm whether

directives are being correctly carried out.

6. The Company has continued to implement and expand a system of internal controls based on a standard framework (COSO Framework*), incorporating the requirements of the U.S. Sarbanes-Oxley Act, documenting and evaluating the effectiveness of internal controls related to financial reporting within the Company. Beginning fiscal 2008, the Company has also formalized an internal controls reporting system based on the requirements of Japan’s Financial Instruments and Exchange Law, improving and expanding the internal controls infrastructure within the firm.

*COSO framework :The most commonly used basic framework for internal control in the United States, also adopted by the Hitachi Group.

[Compliance Hotline]Hitachi Metals formulated the policy for its Compliance Hotline in April 2005, and launched the internal reporting system at Hitachi Metals and Group companies in order to help prevent legal violations or improper actions, and to quickly correct the situation should violations occur.This system allows all employees at Hitachi Metals or its Group companies to report incidents in their workplace by e-mail or sealed letter. Employees can use this system to directly report and resolve issues when they are unable to consult with their supervisor, or receive no response.In this system, employees can not only report anonymously or through a specified channel for the Compliance Hotline but also directly to the Audit Committee.An explanation of the Compliance Hotl ine system is included in al l company-wide compliance training to ensure a high level of awareness of its existence is maintained among all employees.


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Hitachi Metals Group’s CSR activities consist of corporate activities that create "the best possible company," and this corporate philosophy neatly portrays the attitudes Hitachi Metals Group holds toward CSR.

Hitachi Metals formulated its Code of Conduct for Hitachi Metals Group Companies in July 2006, and has conducted CSR on a foundation of "Obey the law and walk the path of virtue".Nevertheless, violations of the Antimonopoly Act were uncovered in 2006 and 2007.In response, Hitachi Metals implemented measures that included extraordinary audits, and an internal training program.Hitachi Metals has no intention of sidestepping this issue, and will continue to implement similar measures during fiscal 2008 to prevent similar cases from arising in the future.In addition, Hitachi Metals made October 2009 the Hitachi Metals Group Corporate Ethics Month, and in this initiative, conveyed the CEO's message to all Hitachi Metals Group staff, and conducted training and other activities.

Compliance Measures

[Internal On-site Training]1. On-site training seminars conducted by the sales director and the Compliance Department

regarding compliance with the Antimonopoly Act and the Code of ConductTarget offices for training : Hitachi Metals head office, branch offices, sales offices, manufacturing sites and research centers; Group companies’ head offices and sales sitesApplies to :Holders of e-mail addressesPeriod :July 2009 - February 2010Number of sessions :75 seminars for 148 business offices (including joint and multiple sessions)

2. On-site compliance training seminars at overseas locations conducted by the ComplianceDepartment

Target offices for training :Overseas business offices (12 business offices)Number of sessions :12 seminars at 12 locations (including joint sessions)

3. Compliance training for specific levels and positions2009 Apr. Training for new hires

Jul. Training for newly appointed junior executiveNov. Sales accounting trainingDec. Training for newly managers

[Compliance Extraordinary Audits]Hitachi Metals conducted extraordinary audits of all its business offices, and the consolidated subsidiaries that operate commercial businesses or independent businesses. Auditors reviewed documents related to these businesses (such as invoices, and papers on industrial organizations to which they belong) and took statements from all sales managers to ensure there were no violations of the Antimonopoly Act.We also reviewed the minutes from meetings of industry groups and the like that our employees attended (Compliance Record*), to confirm that no illegal activities were carried out.December 2009 - March 2010: 44 business offices, and 130 general managers and above responsible for sales.

Hitachi Metals Group Corporate Ethics Month/Message from CEO

Compliance training at the head office

Compliance training at overseas office

*Training on global compliance and information security will be provided at the same time

*Training on global compliance and information security will be provided at the same time

*Compliance Record: A record stating that no actions were taken in violation of applicable law when meeting with employees of competitors cannot be avoided, such as during industry-group conferences or other events.


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(1) We held a Hitachi Metals Group Corporate Ethics Month Compliance Conference, providing a compliance workshop to companydirectors,corporate officers, business-segment officers, directors, branch managers, sales office managers, corporate division managers,group-company presidents, and the presidents of overseas sales subsidiaries.

(2) We distributed a message prepared by the president (in Japanese, English, and Chinese) to employees of the Hitachi Metals Group.

(3) All employees filled out the Hitachi Metals Group CSR Guideline Self Audit Checklist, and reported the results to their superiors.

(4) Each division filled out a Self Evaluation Report in accordance with the Hitachi Metals Group CSR Guidebook, and submitted it to our corporate headquarters.

(5) Compliance Training1) On-site training (July 2009 - February 2010)

Subjects:Code of conduct and CSR; Anti-Monopoly Act*; global compliance; information security

Japan:All employees with e-mail addressesTarget offices:Hitachi Metals head office, branch offices, sales offices, manufacturing sites and research centres; Group

companies’ head offices and sales sitesNumber of sessions:75 at 148 locations (in some cases, sessions were held jointly or multiple times)

Overseas:Manager-level employees and aboveTarget offices:Overseas business offices (12 total)Number of sessions:12 at 12 locations (some sessions were held jointly)

2) E-learning on Hitachi Metals Code of Conduct (original e-learning course by Hitachi Metals)Applies to :Employees of Hitachi Metals with e-mail addresses (in Japan)

3) DVD training course ( "What is CSR of the Hitachi Metals Group?" produced independently by the Company.)Applies to :All employees of Hitachi Metals who did not take the e-learning course (in Japan)

Hitachi Metals Group CSRSince its founding, the Hitachi Metals Group has conducted its business activities in accordance with its corporate philosophy that impels it to "contribute to society by creating 'the best possible company.'" Our CSR activities consist of corporate activities that create this "best possible company," and this corporate philosophy neatly portrays the attitudes Hitachi Metals Group holds toward CSR.

●Hitachi Metals Group Corporate Ethics MonthOctober 2009 was designated as the Hitachi Metals Group Corporate Ethics Month. During this month, we carried out the following measures.

*Training on Anti-Monopoly Act was conducted due to a cease-and-desist order


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*1 An "arterial industry" primarily uses natural resources are to manufacture products utilized in everyday life.

*2 A "venous industry" collects, separates and processes used products and the waste generated from households and facto-ries to turn them into resources.

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Arterial Route

Venous Route

Materials Route

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Resources generated by a recycling company

Energy saving and reducing hazardous substances

Environmentally Conscious Products

FunctionalProducts

Processing toturn waste into

resources

Reuse and recycling throughout the process

Use of virgin materials

Proper processingof waste

Proper processingof waste

Manufacturing CycleArterial Industry

Product CycleSocial

Responsibility Cycle静脈産業

Transformation into functional materialsthrough advanced

productiontechniques

Environmental burden reducedduring use by

customer

Recovery and recycling

Reduction in waste

Apr 2006 Apr 2007 Apr 2008 Apr 2009 Apr 2010

Formulation of CSR Measures Policy,

education and awareness promotion

CSR training and awareness promotion

Assessment of current situation based on CSR

Measures Policy

Examination and evaluation of CSR

activities

Optimization of CSR activities and

implementation of strategic CSR

Group-wide measures to address

social issues

Become "the best possible

company"

FY2010

Circular Flow of Resources

Hitachi Metals Group CSR Roadmap

Arterial Industry

Venous Industry

Collection and transport company

UsedProducts

Waste

Since our inception, the Hitachi Metals Group has valued resource recycling as an indispensable busi-ness mechanism. We are an upstream materials manufacturer acting as an arterial industry*1. At the same time, we also act as a downstream venous industry*2, adding new value to industrial waste output from various industries, reconstituting this waste as useful resources. The Hitachi Metals Group has continued to be a leading entity in developing resource recycling mechanisms, even before the phrase "recycling-oriented society" became popular-ized.Our mission, and a driver of our business growth, is to contribute to the creation of a sustainable society, reducing the burden on the environment not only during the manufacturing process but also through-out the entire product lifecycle, from raw materials procurement to customer consumption to disposal.

CSR Measures PlanningHitachi Metals newly formulated the Code of Conduct for Hitachi Metals Group Companies in July 2006. This code states as the fundamental principle for CSR that "The Company, in its business activities and relationships with stakeholders, will remain conscious of social and environmental issues and take responsible action, thereby allowing for the sustainable development of the Company and society." To fulfill its corporate philosophy of "contributing to society by creating 'the best possible company'", the Hitachi Metals Group has made its Code of Conduct the cornerstone of Group CSR activities. In line with this policy, we have formulated the Hitachi Metals Group CSR Roadmap, which covers the period through fiscal 2010, and are now implementing the specific measures con-tained therein.In fiscal 2009, we used various tools to increase internal awareness during Hitachi Metals Group Ethics Month. These included the implementation of the Code of Conduct for Hitachi Metals Group Companies and Policy on CSR Initiatives, and continuation of our measures to raise awareness of CSR.

Hitachi Metals Group Sustainable Business Model :Resource Recycling


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Personal Information Protection / Information Security Initiatives

Office organization

PositionsPositions

Groupcompanies

President

Secretariat

Basic Policy of Information SecurityStandards for Information Security Measures

Personal Information Protection PolicyRegulations on Management of Personal Information

Overall management of personal information protection / information security

●Implementation of various measures

General administration of all personal information protection / information security at office

●Implementation of various measures

●Information systems management and operation

Execution Administrator (Secretariat)

Personal Information Protection /Information Security Committee

Personal Information Protection /Information Security Manager (office manager)

Information Asset ManagerPersonal Information Administration manager

Information Asset ManagerPersonal Information Administration manager

Information Systems Administrator

Security Management MeasuresInformation Security Regulations

Create administrative standards for handling personal information

Informationassets to be protected

Educate administra-tors and users●Basic measures●Obey rules, secure

actions

Measures to protect information assets●Administrative measures; create

and implement rules●Technical measures; prevent

information leaks using IT

Clearly identify the information assets to protect(categorize & analyze risks)

Clearly identify the personal information to protect(identify, categorize, and register)

Establish information-security organization●Use plan-do-check-action (PDCA) cycle●Respond to incidents

Personalinformation

Personal dataStored personal

data

Create point of contact for identified individuals

Create privacy managers

Acquisition Use Management

Personal Information Protection / Information Security InitiativesThe evolution and spread of IT, particularly in the form of the Internet, has resulted in expanded litany of security risks. Managing and protecting corporate information, including the private information of individuals, is more important than ever as a corporate social responsibility. The Hitachi Metals Group established a "Basic Policy of Information Security" in April 2004, followed by a "Personal Information Protection Policy" in January 2005, establishing a system of personal information protection/information security based on these policies. The Company continues to update information security measures on an ongoing basis.

Personal Information Protection / Information Security InitiativesHitachi Metals has instituted a set of rules related to the handling of Company information (including personal information), the use of information equipment, and information security, working to instill an understanding of these rules throughout the entire Company. The Company conducts an annual review of these rules to keep up to date with changes in legal and environmental conditions.We significantly revised our system in fiscal 2009, and plan to put the revised rules into effect in the first half of fiscal 2010.

Information Security MeasuresHitachi Metals has systematically implemented measures against external threats from unauthorized access and computer viruses, internal threats such as the unauthorized removal or loss of company information, and other threats including natural disasters, etc.Since fiscal 2007, the Company has also requested its business partners to deploy equivalent measures to prevent business informa-tion leakage via file-sharing software on personal PCs.In fiscal 2009, we introduced a system to filter all e-mail sent externally, as a measure to prevent external leaks of operational infor-mation. We also took other measures to prevent information leaks, including revisions to how we manage portable information termi-nals (e.g. PDAs and smart phones), in order to prevent losses of increasingly capable mobile phones and other devices.


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Employee EducationEach year, the Company conducts information security education for all employees (including temporary staff, etc.) who use IT equip-ment. This education is designed to instill an understanding of rules related to the use of IT equipment, including the handling of infor-mation (including personal information), and the prohibition against using personal PCs for work. During fiscal 2009, the Company conducted on-site training at Hitachi Metals Group locations (simultaneously with compliance training), while also instituting e-learning training. Both initiatives were designed to improve the security awareness of every Hitachi Metals Group employee.

Self-AuditEach year, the Company conducts a self-audit of personal information protection / in-formation security, confirming the status of the rules compliance, and improving any areas that need to be addressed.Our fiscal 2009 audit was performed between November and December.

●On-site training at domestic business officesJuly 2009 - February 2010Training recipients : All persons with e-mail addresses of the Hitachi Metals GroupNumber of sessions:75 sessions covering 148 business offices (including joint and multiple sessions)

●On-site training at overseas business officesMarch 2010Training recipients : Managerial employees at overseas business offices (total:12 business offices)Number of sessions :12 sessions at 12 locations (including joint sessions)

●e-learningFebruary 2010Training recipients :All persons with of the Hitachi Metals Group e-mail addresses (domestic)


Nowadays, CSR is considered to be a fundamental part of a company’s existence. In their day-to-day work, individual employees of the Hitachi Metals Group have a strong commitment to CSR. Each employee’s personal CSR vision and the method by which he or she puts this vision into practice varies widely depending on the division to which they belong, their work environment and other factors. For this group discussion, we brought together eight young Hitachi Metals Group employees to discuss their own particular approaches to CSR.

NEOMAX Company Planning Division

Masaki Kobayashi(Joined Hitachi Metals in 2002)

Mr. Kobayashi carries out sales planning for NEOMAX®, the world’ s top brand of rare-earth magnets. NEOMAX® magnets are indispens-able in such applications as hybrid electric vehicles (HEV).

Thinking about — and putting into practice —Hitachi Metals Group CSR

Moka Works Management Group

Ken’ ichiro Shimazu(Joined Hitachi Metals in 2000)

Mr. Sh imazu is engaged in mater ia ls operat ions at the Moka Works, which manufac-t u r e s a u t o m o t i v e c a s t i n g components.

Information System Components Company / Sales Division

Yasuhiro Yamanaka(Joined Hitachi Metals in 1988)

Mr. Yamanaka is involved in sales of information system compo-nents, which are used in various e lect ron ic dev ices. Th is is a relatively small category within Hitachi Metals’ overall product portfolio.

Specialty Steel Company Industrial Materials Business Unit

Hiroki Nagahama(Joined Hitachi Metals in 2003)

Mr. Nagahama is tasked with expand-ing sales of steel for use in turbine blades and other high-performance applications. These products utilize the unique properties of Yasuki Hagane® steel, which inherits Japan’s ancient tradition of tatara steel making.

Moderator: Corporate Management Planning OfficeCSR Management Office

Nobuhiro Narita(Joined Hitachi Metals in 2003)

A l t hough Mr . Na r i t a wo rks i n t he Management Planning Off ice ( legal group), he also holds concurrent respon-sibilities in the CSR Promotion Office.

Roll Company Sales Division

Ryota Kawada(Joined Hitachi Metals in 2002)

Mr. Kawada works to expand sales of mill rolls to overseas steel makers. His current target markets include India and other countries in Asia.

Soft Magnetic Materials CompanyF Project

Rieko Uematsu(Joined Hitachi Metals in 2008)

Ms. Uematsu works at a plant that produces amorphous metals, which contribute to the reduction of CO2 emissions. She is also involved in direct negotiations with clients.

Piping Components CompanySales Division

Tatsuro Morita(Joined Hitachi Metals in 1997)

Mr. Morita is tasked with expand-ing sales of piping components, which play an important role in providing drinking water, gas and other essential utilities to house-holds.

Technology Center Environment Management Department

Mari Ibuka(Joined Hitachi Metals in 2008)

Ms. Ibuka’s job deals with compa-nywide environmental manage-ment. Until 2009, she worked at Hitachi Metals Europe GmbH to e n s u r e c o m p l i a n c e w i t h t h e European Union’s REACH regulation (Registration, Evaluation, Authoriza-tion and Restriction of Chemicals).

13

Moderator In 2006, the Hitachi Metals Group established the Code of Conductfor Hitachi Metals Group Companies, which comprises five coreprinciples. Each year, the Hitachi Metals Group runs CSR trainingprograms based on this Code of Conduct. In the context of yourexperience to date and your daily work operations, how do each ofyou view Hitachi Metals Group CSR?

Shimazu Since I work at a factory, I have a strong awareness that nurturinghuman resources at the production front line is the essence of CSR.It is people that put CSR into practice. I also believe that fosteringnew employees to become full-fledged members of society is impor-tant for CSR.

Uematsu I too work at a factory. I have begun to think about translating CSRinto concrete results from the point of view of formulating and put-ting into practice specific cost-saving measures. Complying withlaws and regulations is relatively straightforward but I would reallylike to take it a step further and practice what truly deserves to becalled CSR.

Nagahama I am involved insales, so I think thatthe foremost CSRthat I need to fulfill isresponding to thedemands of cus-tomers. At the sametime, it is importantto maintain a strongawareness of compli-ance issues.

Yamanaka From a sales perspective, I am acutely aware of the complianceaspects of CSR, both in Japan and abroad. My sales team is oftendirectly competing with other companies when it tries to win orders.There is the danger that—if we adopt the wrong approach—withouteven realizing it we may find ourselves in a situation that could be inviolation of the Antimonopoly Law.

Kobayashi I agree. If we go outto a client’s office orfactory, and we happento run into a com-petitor, we have tobe very careful aboutwhat we say and do.Also, in businessdealings in countrieswhere there are stilllarge differences fromJapan in what is considered "normal practice," we try as much aspossible to build a common understanding of what is acceptable.

Kawada In our normal sales activities, we are committed to doing common-sense things in commonsense ways. However, the difficult partcomes when different countries have different ways of perceivingthe things that were just mentioned—"normal practice" or "com-monsense." Hence, we need to think closely about what is regarded

as "commonsense" in the countries where we are doing business.Ibuka Until last year, I was working in Europe, where there is a very high

level of CSR awareness. In particular, I was able to gain firsthandexperience of the importance of CSR. I believe that we must addressCSR with an underlying awareness that companies not living up totheir responsibilities are likely to suffer serious damage to theircredibility within society.

Morita I think that within CSR, as a corporate group there are things thatwe need to addressinternally and thingsthat relate to ourexternal interactions.For example, exter-nally we need toexplain the stance ofthe Hitachi MetalsGroup in such areasas compliance.Internally, we have toaddress human resource development. In particular, I feel that thelarger a customer’s organization is, the more closely they tend toscrutinize our CSR-related practices.

Moderator It is clear that each of you have your own perception of CSR.Moreover, the views you have expressed provide a good under-standing of how you are each utilizing your understanding of CSR toput it into practice.

Moderator A large proportion of the parties who request copies of the HitachiMetals Group CSR Report are either universities or university stu-dents. What are your views on this particular trend?

Yamanaka In recent years, the news media has given substantial coverage toCSR-related issues, so I think it is only natural that universities andstudents should have a heightened awareness of CSR.

Shimazu Without doubt. Several years ago, when many of us were searchingfor a job, I doubt that we were greatly aware of CSR. However, if onelooks at the job-hunting process nowadays, there is a lot of informa-tion contained in CSR reports that could be very relevant as subjectmatter for questions for students taking interviews. As a corporategroup, maybe we need to put even more effort into our CSR reportas a way of deepening mutual understanding with students.

Ibuka I wanted to work in the environmental field, so when I was looking fora job, before I went to an interview, I thoroughly read the company’senvironmental and CSR reports. I think that it is one way of measuringa company’s credibility. For reasons such as these, I think it is impor-tant to produce reports that are accessible to young people.

Kawada Although I did not ask any questions relating to CSR during my jobsearch, nowadays, when corporate scandals are often in the head-lines, CSR reports are much more likely to be used by students as akey input when judging the value of a company.

Nagahama These days, through the Internet, for most people it is easy to obtainand read any company’s CSR report. Hence, many students careful-ly read the CSR reports of companies they are interested in to gain apractical understanding of each company’s CSR activities prior to

14

CSR reports are essential reading for those who seek to be full-fledged members of society

Taking the lead in addressing CSR within daily operations

joining a company. So I think it is important to realize that there is ahigh level of interest among students.

Uematsu As awareness within society increases, I expect that we will enter an eraof ever more rigorousscrutiny of CSR. In myown experience, stu-dents who are gettingready to enter thework force in the nearfuture tend to be verysensit ive to thesekinds of issues.Hence, I think that theCSR report is becom-ing an important tool for addressing these needs and also for raising ourlevel of credibility as a corporate group.

Moderator So it would be fair to say that the CSR report is rapidly becoming atype of educational text that is essential reading before joining acompany. For students, it is a valuable source of information forgaining an understanding of companies when researching prospec-tive employers.

Moderator As a materials manufacturer using advanced technology, theHitachi Metals Group produces a diverse range of products, fromspecialty steel and casting components to magnets, electronicdevices and amorphous metals. Each of you present here todaydeals with different types of products. Furthermore, you comeinto contact with customers and society through an array of dif-ferent work situations, including the factory, head office andsales activities. The basis for CSR is thinking about the relation-ship between a company and its stakeholders. In other words, forus this is the relationship between the Hitachi Metals Group andall of the people it interacts with or affects. I want to hear yourviews on the Group’s stakeholders from your own particular per-spectives.

Morita Needless to say, as someone involved in sales, the stakeholders Ihave to think about first are the customers I deal with on a day-to-day basis—trading companies, general construction compa-nies and subcontractors. In addition, in the background there aremajor real estate developers and building owners. So I amalways aware that even the scope of direct stakeholders for theprojects I work on is quite broad.

Kobayashi Certainly, when I think about my regular sales activities, the first

stakeholders I thinkabout are my cus-tomers. Of course,at the same time, Iam also very mind-ful of our supplierssince some of theraw materials usedin our magnets arevery scarce.

Moderator It stands to reasonthat we think of the customer first, since it is they who purchase theGroup’s products. There would be something amiss if that were not thecase. But what about in the case of a factory?

Shimazu Since I work in procurement, when I think about stakeholders I thinkof partner factories and other suppliers and also the people who livenear to these factories and their and local communities. Withoutmaintaining this type of perspective, I think it would be difficult for amanufacturer to last for very long in a local area.

Nagahama My work primarily involves components and materials related tonuclear power generation. For this reason, I am necessarily con-scious of a very broad scope of stakeholders. Speaking hypothetical-ly, if a product delivered by the Group were ever the cause of anaccident at a customer’s plant, people living near to the plant maysuffer damage or injury, the level of trust placed in us by societywould plunge and such an incident may even have an impact on theJapanese government’s nuclear power-related policies. With theknowledge that our scope of stakeholders is potentially very large,we have to undertake our business operations while always main-taining a certain level of tension.

Moderator Consumers do not generally get to see the Group’s products in an unmod-ifiedstate. Rather, ourproducts are used in awide range of applica-tions and products.Hence, it is vital for usto think about ourconnections with soci-ety.

Yamanaka The Hitachi MetalsGroup operates in anupstream industry.Therefore, if any problems arise, there is the risk that the impactmay spread as far as downstream industries and customers. If wethink about the implications, we have a duty to carry out our workwhile constantly maintaining an awareness that we are connected to

Our stakeholders—from customers to the Earth’s environment

15

a very large number of people—with most of whom we do not comeinto direct contact.

Uematsu Where I work, at the factory in Yasugi City, Shimane Prefecture, thelocal area has a long history as a Hitachi Metals company town. Thisbackground provides a common awareness that our stakeholder scopeextends to the local community, local public agencies and beyond.

Kawada Even though it generally goes without saying that the first stakehold-er is the customer, one can take the view that ultimately everyoneliving on this planet is a stakeholder. Although at first glance suchan assertion may seem rather far-fetched, by looking at individualcases within our daily business operations and thinking about thesein conjunction with material we cover in our annual training pro-grams, we put in a lot of effort into translating CSR theory intosomething tangible and practical.

Ibuka From an environmental perspective, one can argue that the Earth’senvironment is a stakeholder too. While it is obvious that the peoplewith whom we deal directly are stakeholders, similar to a supplychain, everyone on this planet is connected in some way. I aim to domy job in a way that meets the expectations of our stakeholders,whose scope is really limitless.

Moderator From the things we have discussed, I can appreciate the determinedefforts you are each making with regard to giving CSR practical form.

Moderator Since you are all younger members of the Hitachi Metals Group, thefuture of the Group is in your hands. So I would like to ask each ofyou to voice your own resolve on how you intend to put CSR intopractice within your own day-to-day work.

Shimazu The suppliers with whom I come into contact on a daily basis have asignificant impact on the local community. By building harmonious,mutually beneficial relationships with those stakeholders, I aim tocontribute to the local community. I see this as part of our contribu-tion to society and also as an integral part of CSR.

Uematsu As a factory, it is our responsibility to respond to the requests of ourcustomers by producing amorphous metal products that are uniqueinternationally—products that only the Hitachi Metals Group iscapable of manufacturing. It is also our duty to nurture the uniquetechnologies on which these products are based. I am conscious ofboth of these roles, which means that I approach my work with aprofound sense of responsibility.

Kobayashi My job is principally focused on magnets. The raw materials forthese magnets include certain very rare metals. From the perspec-tive that we have a duty to effectively utilize these scarce resources,we must work to ensurethat resources are notwasted. While respond-ing to the demands ofour customers, westrive to ensure thatthe products we sup-ply do not exceed thecustomer’s specifica-tion requirements.Above all, I want to

take responsibility for ensuring the maintenance of stable supply.Kawada While valuing our customers highly, I aim to conduct sales activi-

ties that are not driven solely by customer demands. The reasonbeing that although the customer is our number one stakeholder,from the customer’s perspective, the Hitachi Metals Group is alsoa stakeholder of theirs. For the time being, I intend to focus onthe development of the Indian market, which is emerging at avery rapid pace. I want my sales activities to facilitate a win-winsituation for both buyer and seller.

Morita Through my job dealing with piping components, I intend to wintrust in the Hitachi Metals Group. Pipes are used to supply waterand gas—essential to our daily lives. Thus piping componentssupport important parts of our social infrastructure. I am commit-ted to ensuring that our quality is maintained, because if wecompromise on quality, we risk losing the trust placed in us.

Nagahama I intend to further step up my efforts by utilizing the Group’saccumulated experience to date as the basis for CSR-relatedresearch. While constantly remaining mindful that I am dealingwith products that could have an impact on human lives, I aim toundertake my work with a sense of pride and fulfill my CSR obli-gations.

Ibuka I see my first steptoward CSR as moni-toring the latest envi-ronmental informa-tion and relaying suchinformation to facto-ries and other partsof the Group. By doingmy job in a way thatenables staff andorganizational units within the Group to act swiftly, I intend to con-tribute to the smooth functioning of the entire Hitachi Metals Group.

Yamanaka Typically, consumers use the Group’s products without knowing it.Mobile phones are one such example—to look at the end productgives no indication that a Hitachi Metals Group product is inside. Toconstantly improve the functionality of these kinds of products, I wantto manufacture andmarket products tothe highest qualityusing cutting-edgetechnology. By doingso, I aim to respondnot only to the needsof our customers butalso to fulfill an impor-tant role within ourCSR.

Moderator I think our discussion today has shown clearly that there is a high levelof CSR-consciousness among young members of the Hitachi MetalsGroup. This has been conveyed by the robust views you have eachoffered. Thank you for making time within your busy work schedules toparticipate in today’s conversation.

Working toward even higher level CSR practice in the future

16

17

[In Cooperation with Society and the Local Community]

S o c i a l R e p o r t

The Corporate philosophy of the Hitachi Metals Group is to "contribute to society by creating 'the best possible company,'" and the Code of Conduct for Hitachi Metals Group Companies includes the aspiration to continue to contribute to society as a good corporate citizen. Pursuant to these policies, the Company is engaged in a variety of social contribution activities.

Harmonious Coexistence with the Local CommunityIn every location, Hitachi Metals Group companies volunteer both personnel and physical support for local community activities,

including popular community races and school athletic events. Hitachi Metals Group companies also proactively engage in communi-

cations with the local community, bringing in tour groups, participating in local cleanup activities, and opening company recreational

facilities to the public (gymnasiums, play fields, tennis courts, etc.).

1

2

3

4

5

Support Offered through a FoundationDriven by the goal of contributing to the development of material science research in Japan, Hitachi Metals has provided personnel

and physical support to the Research Foundation for Materials Science in Japan, established largely with funds willed by Dr. Kakuno-

suke Miyashita (former Hitachi Metals vice president), since its inception. The Hitachi Metals Group also supports and contributes to

environmental preservation projects, educational, academic and cultural interchange with Asian countries, support projects for the

healthy development of youth, educational activities in the United States, etc. conducted by Hitachi Group foundations Hitachi Envi-

ronment Foundation, the Hitachi Scholarship Foundation, the Hitachi Mirai Foundation, and the Hitachi Foundation (U.S.).

Preservation of Historic Sites and Traditional CultureHitachi Metals supports the production of Tatara steel engaged in by the Society for the Preservation of Japanese Art Swords. Tatara

is a steel-making technique unique to Japan, with a historyspanning more than 1000 years, and resulting in the creation of Tamaha-

gane steel indispensable to the manufacture of Japanese swords. Tatara steel ceased to be produced after the war, but the tech-

nique was revived in 1977 as the Nittoho Tatara by the Society for the Preservation of Japanese Art Swords with the support of the

Japanese national government. Hitachi Metals has offered its backing for the restoration of this uniquely Japanese cultural tradition,

continuing to support the manufacture of Tatara steel.

Disaster Area SupportWhen earthquakes and other major disasters occur, the Hitachi Metals Group coordinates with related organizations, providing sup-

port for the disaster area.

Social WelfareThe Company provides wheelchair and other universal access equipment to social welfare organizations in areas surrounding head-

quarters and company housing facilities. In addition, the Company supports and contributes to the activities of the "Sawayaka Wel-

fare Foundation," (social welfare foundation) which promotes the creation of groups (local networks) that promote volunteer activities

in the community.


18

[Harmonious Coexistence with the Local Community]


Kuwana WorksCommunity cleanup activities

Tottori WorksCity cleanup activities in cooperation with local citizens at Tottori Station, city parks, etc.,

Cleanup activities at Jonan Shrine Cleanup activities at Jonan Shrine

Cleanup activities near the factory Cleanup activities near the factory

Cleanup activities at Hisamatsu Park Cleanup activities at Hisamatsu Park

Community Cleanup Activities

Yasugi WorksCommunity cleanup activities

Clean-up Yasugi day


19



Kuwana WorksKuwana City Mama-san Volleyball Tournament

Tottori WorksTottori Prefecture Junior High Volleyball Tournament

Sponsoring and Supporting Sporting Events

Kyushu WorksKanda Friendship Marathon


20



社会性報告

環境性報告

経済性報告・コーポレートデータ

コーポレート・ガバナンス

Yasugi WorksYasugi District Junior High Sports Competition


Nakaumi National Marathon


21



Yasugi Works

Other Activities

小学生の社会科工場見学


HMW, Ltd.Wakamatsu Ward Junior High School Baseball Tournament

T O P I C S

Elementary School Social Studies Factory Tour Civic Concert

Communicating with Local Communities"Let’s clean up the polluted sea and bring back the fish"

Participation in the International Coastal Clean Up of Rosario City, the PhilippinesNEOMAX Company San Technology, Inc

In Rosario City, a suburb of Manila in the Philippines, the International Coastal Clean Up Activity is being conducted, aiming for the vegetation by sinking a man-made fish reef made of natural materials out at sea. San Technology, Inc.

under NEOMAX Company, supported this activity together with local companies in the Cavite Economic Zone (CEZ), and dispatched employee volunteers and made a contribu-tion (25,000 pesos) to the fish reef materials.

Dispatched employee volunteers Award ceremonyAt the front are the man-made pyramid-shaped fish reefs


22

[Preservation of Historic Sites and Traditional Culture]


Awards ceremonyMaking Tatara steel

Yasugi WorksThe 14th Yasugi Blade Festival


23

[Pursuing Mutual Growth with our Business Partners]


Seeking to create products that offer the greatest customer satisfactionDriven by twin philosophies of priority on quality and placing the customer first, the Hitachi Metals Group continues to improve our quality assurance technologies, offering products that delight both our customers and the ultimate product consumer. This is yet another way in which we contribute to the betterment of society.

With Our Customers

Quality Assurance StructureThe Group’s core materials and components are supplied to a wide range of customers in the steel, automotive and electronics indus-tries. Quality assurance, appropriate to the needs of each customer, is carried out at every site. All domestic factories have received ISO 9001 (2000) or ISO/ TS16949 certification, and have established quality assurance structures in place.The Hitachi Metals Group has manufacturing plants in the United States, Asia and Europe, and is developing businesses appropriate to each area of operation. The factories in Japan function as "mother factories" to their overseas counterparts, and provide guidance regarding manufacturing technologies and quality control through close links. The major factories overseas have also received ISO 9001 (2000) certification.

・・・

・・・

・・・

・・・

July 1, 1988 President

Philosophy Underpinning Quality Assurance Activities

1. Objectives behind the Establishment of our PhilosophyUnderpinning Quality Assurance Activities The company creed of the Hitachi Metals is the continual pursuit of technology, contributing to the betterment of society through the manufacture and sales of high-quality, distinctive products.Quality assurance activities are the underpinning of our "monozukuri" activities. We practice quality assurance activities as a fundamental part of our daily work. To further instill an awareness of quality assurance activities throughout our organization, we have established a Company-wide standard, clearly defining our philosophy regarding quality assurance activities within Hitachi Metals.

2. Philosophy Underpinning Quality Assurance ActivitiesThe Hitachi Metals’ philosophy concerning quality assurance activities is built on the famous Hitachi "Ochibo Hiroi" (gleanings) concept. This activity philosophy is as described below.

(1) Quality First, Customers FirstProduct quality is the highest priority among our many duties to our customers.Our primary objective is to be a trusted company that satisfies customers and plays a role in the betterment of society.

(2) Build quality into our products, and conduct final inspections from the standpoint of the customerQuality is the starting point for all of our corporate activities.When development, production, sales and other departments maintain a focus on quality, all working as a team to consistently improve quality within the organiza-tion, we can build quality into our products as an inherent component. Manufacturing and final inspection are the twin pillars of quality assurance. Error-free technology and equipment, production management, and a continuous approach to final inspection from the standpoint of the customer is what ensures the quality of Hitachi Metals products.

(3) A sincere response to quality issues; prevention of recurrenceIf we ever inconvenience our customers because of a quality defect, we believe it is our responsibility to resolve the issue in the best manner possible. We must fully investigate the underlying cause of the issue, learning the lessons that will ensure the issue never happens again.

Executive Director Responsible for Technology

Headquarters Quality Assurance Group

Corporate Divisions

Manufacturing Facilities PS Committee

Company PS Committee

Companywide PS/PL Committee

Chairperson

Headquarters

Members

Headquarters

Members Sales/Planning/Related Sales Divisions

Company President Company President

General Manager, Works General Manager,Works

HeadquartersAssurance Division

MembersTechnology Division Manufacturing Division

Members MembersControl Division

Quality Assurance Manager (General Manager Responsible for Technology)

President


24



社会性報告

環境性報告

経済性報告・コーポレートデータ

コーポレート・ガバナンス

Safe Product Supply SystemThe heads of quality assurance in each corporate division and each internal company compose the Product Safety (PS)/Product Liabil-ity (PL) Committee of the entire Group, and carry out PS activities. New products and those in development are subject to thoroughPS design reviews, thereby assuring the production of safe products. With the aim of assuring product safety, the Group-wide PS activities are linked with Works-based PS activities. The entire Hitachi Metals Group also has further strengthened its controls onsubstances of environmental concern.

With Our Customers

＋

Development Procurement Manufacture, quality assurance (QA)

Environmental CSR-Compliant Monozukuri Structure

*1 REACH regulation:Registration, Evaluation, Authorization of Chemicals

*2 J-Moss:Refers to a new set of regulations issued in December 2005 to coincide with the revision of theLaw for the Promotion of Effective Utilization of Resources. These regulations are stipulated as a JIS standard (JIS C 0950:2005) and are in line with the EU’s RoHS Directive. J-Moss concerns the disclosure of the presence of specific chemical substances in electrical and electronic devices.

*3 Promote the identification of chemical substances included in products; register and file for approval ofchemical substances, provide information regarding chemical substances to customers.

Management standardsand operational rules

Basic policyand structure

Customers

Development ofproducts thatdo not contain

hazardous substances

Purchase of materialsand components

that do not containhazardous substances

Do not shipproducts that

contain hazardoussubstances

Ingredientlabeling,

guarantee andmaintenance

■Worldwide Spread of Product-Based Environmental Regulations

Quality Incident Response StructureAll incidents involving products are reported to the Corporate Division and to the internal company through the designated information channels. In addressing such incidents, both the direct causes and the background factors leading to those causes are investigated thoroughly. When investigating background factors, the Hitachi Metals Group places particular importance on uncovering motivational factors as part of its efforts to prevent recurrences.The legendary Hitachi Group "Ochibo Hiroi" (gleanings) meeting is one activity that we undertake to ensure that we learn lessons from accidents and other mistakes. This meeting is held annually within each Group company, as well as at the domestic and overseas manufacturing facility level.

Supervision of substance contained in productThe Hitachi Metals Group embraces a global approach to "Environmental CSR-Compliant Monozukuri" activities— methods of produc-tion that do not incorporate harmful substances. As shown in the figure below, these activities involve the elimination of harmful sub-stances at each stage of production and a system that identifies within 48 hours the impact of shipped product that happens to con-tain harmful substances.

Measures to comply with the REACH RegulationThe Hitachi Metals Group conducted preregistration activities in accordance with the REACH regulations enacted on June 1, 2007, and is currently involved in the identification of hazardous substances as well as SIEF and other activities in preparation for Reach reg-istration.

●Europe : RoHS Directive, ELV Directive, REACH Regulation*1

●China : Provisions on the Environmental Administration of New Chemical Substances●Japan : J-Moss*2, Act on the Evaluation of Chemical Substances and Regulation of Their

Manufacture*3, etc., and various recycling laws


25



Our Approach to CSR ProcurementCSR in procurement activities means that first and foremost, we are a company that practices CSR, and that we do business with other companies that practice CSR.We communicate this fundamental stance to potential business partners prior to entering a new relationship, confirming that the activities of the potential partner comply with accepted CSR practices.As one measure to prevent the unauthorized disclosure of Company information, we require that business partners perform an annual assessment of Company information on their computers.

With Our Suppliers

●Comply with laws, regulations and social requirements●Fair, clean trading●Open, global procurement●Maintain partnerships●Keep confidentiality●Preserve the environment

Procurement Policy

FY2003 FY2004 FY2005 FY2006

Index* Ratio90%

80%

70%

60%

50%

40%

30%

20%

300

250

200

150

100

50

0

100

145157

191

57%

72% 71%75%

FY2007

238

82%

FY2008

232

86%

Green Supplier Ratio (Number of Companies)

FY2009

86%

132

Green Supplier

87%

Not approved

13%

ComplianceThe Company makes a daily commitment to obey laws, regulations, and social proprieties in our transactions with our business part-ners. On a regular basis, we call together our procurement specialists to provide ongoing education regarding laws and regulations, as well as to confirm the status of compliance. Specific initiatives regarding legal compliance include establishing and implementing internal rules for self-regulation regarding com-pliance with the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors.

Green ProcurementHitachi Metals is a materials manufacturer, contributing to the betterment of society through products that are incorporated into the final products of our customers. Accordingly, it is important that we do what we can to reduce our environmental footprint in the pro-cess of materials and components procurement.We pursue a policy of Green Procurement, giving greater weight in purchasing decisions to products that meet our environmental quality standards. Our ratio of Green Suppliers and Green Procurement for fiscal 2009 exceeded that of the prior fiscal year.We also revised our "Green Procurement Guidelines" during fiscal 2009, issuing requests for support to secondary suppliers.

Green PurchasingHitachi Metals began a green purchasing initiative with office paper, stationery and other office supplies, which has since expanded to include office equipment and more.All of our factories have adopted the use of Internet-based procurement, allowing us to select and purchase indirect materials that conform to the Law on Promoting Green Purchasing or are otherwise environmentally friendly. We are presently looking to expand this practice across other Group companies as well.

*For presentation of index, the amount spent on green procurement in fiscal 2003 is set as base figure of 100.

Green Procurement Ratio (Value of Procurement ) (Hitachi Metals Non-Consolidated)


26

[Fostering the Welfare of Employees and Society]


With Our Employees

Encourage self-independenceCreate a corporate culture that fosters self-responsibility

and awareness of the importance of career formation

To Achieve Our Management Vision●Develop Innovative, Strategic Human Resources●Develop Human Resources Highly Skilled in Organizational

Management●Develop World-Class, Technically Superior Human Resources

●Career development system (career registration, self-assessment, FA system, recruitment system)●Develop human resources based on

the superior/subordinate relationship utilizing management by objectives, and incorporating the PDCA cycle

●Career design training, career counseling

●Regular implementation of career path/career assessment through HR development conferences

●Career development support emphasizing expertise and opportunities to demonstrate skills

● In-house training, including business management techniques; manager development training

(　　　　　　　　　　　　　　　 )Goals

Specificmeasures

Human Resources TrainingOur goal is to develop human resources indispensable to the continued development of high-function, original, world-leading environ-mentally friendly products.Our approach to our "people" is the distillation of "strength through harmony," our fundamental spirit since the inception of our com-pany. Based on this philosophy, we continue to conduct activities toward creating an organizational culture that facilitates individuality and independence.As a company, we support the motivation and behavior of our employees to gain expertise, and to become effective human resources who can be proactive in uncovering and resolving areas of improvement. Our corporate HR slogan is "learn, shine, accept the chal-lenge," reflecting the determination for each and every employee within the organization to be a key driver of growth? a sentiment incorporated into our "Materials Magic" communications symbol.

Training and Education SystemWe strive to develop an in-house training program and training content allowing us to differentiate ourselves from other companies on both the individual and organizational levels, recognizing that the strength of a corporation is derived from the accumulation of indi-vidual abilities plus organizational capacity, while still accepting that there are limits to available resources according to the scale of the corporation in question.

Labor and Management RelationsHitachi Metals sincerely addresses common management-labor issues, respecting the basic rights and responsibilities of each, built on a "foundation of mutual trust." The Company provides full explanations of management policies, business plans, management measures, etc., at various meetings, while at the same time listening to feedback from the employee union as Company management works for the rapid implementation of various corporate measures.In fiscal 2010, we will begin the full-scale implementation of a labor and management structure that corresponds to our company structure. Increasing the level of communications will help establish a stronger relationship between labor and management within the Company.The employee unions of the Hitachi Metals Group companies have formed a union council, using the forum to periodically exchange opinions and making clarification regarding Group management policies and plans, enhancing mutual understanding.

Respecting Human RightsIn becoming the "best possible company" to which we aspire, we must create a work environment of mutual trust, where the individu-ality and rights of each person are respected without discrimination.We have established harassment hotlines and related oversight programs. We are also committing Company resources to educational programs that formally promote awareness of human rights. These programs include e-learning systems for human rights education, training according to seniority within the Company, and other opportunities.


27

[Fostering the Welfare of Employees and Society]


With Our Employees

2.2

2.0

1.8

1.6

1.4

1.2

1.0

130

120

110

100

90

80

70

123

1.67

1.84

123

96

83

2.08

1.86

Employment rate for physically-challenged individuals (%)

Employment rate for physically-challenged individuals

*Severely handicapped individuals counted twice

FY2005 FY2006

30

25

20

15

10

5

0FY2007 FY2008FY2007 FY2008

126

1.94

FY2009

No. of Employees

No. of Births

Requests for Leaves of Absence

FY2009

16 17

26

FY2005 FY2006 FY2007 FY2008

Frequency of Occupational Injuries

FY2009 (Year)

2.00

1.50

1.00

0.50

0.00

All Industries Manufacturing Steel Hitachi Metals Group

Change in employment rate of physically-challenged individuals

1513

19

Requests for Child-Rearing Leaves of Absence

*Frequency of Occupational Injuries = No. of occupational deaths or injuries ÷ total labor hours × 1,000,000

* Report on the fatal accident at Hitachi Metals Wakamatsu, Ltd.On the September 23, 2009, a grave accident occurred at the Group’s Hitachi Metals Wakamatsu, Ltd. in which three workers were hospitalized with burns, and one died. At Hitachi Metals Group, we take this accident extremely seriously, and have made a fundamental review for the site safety, with the assumption that regular routines expose workers to grave latent risks. We are implementing daily safety initiatives to ensure that this kind of grave accident never happens again.

Employment of the Physically Challenged and Support for Nurturing the Next GenerationHitachi Metals has been an early adopter in building a system providing employment opportunities for physically challenged individuals. In 1998, Hitachi Metals established the Hallow, Ltd. special subsidiary, followed by Kuwana Create Co., Ltd. in 2006, which received special government certification as a company offering employment opportunities for the physically challenged. These two companies have been recognized by their local communities for their policies, including the active hiring of mentally impaired individuals.Beginning fiscal 2008, the Company has established a children allowance benefit for employees as a policy for supporting the devel-opment of the next generation, strengthening our support of employees who are raising children. In 1992, Hitachi Metals was also one of the first firms to adopt a system to re-employ individuals who have retired from the Company due to childbirth or home care, dem-onstrating once again our forward-thinking policies.The Hitachi Metals Group has an established child-care/home-care leave program. Since fiscal 2007, the Group has offered up to 20 days (in combination with family care leave) for each leave year for the care or nursing of the employee’ s parents (or in-laws), spouse, or children. With the fiscal 2010 revision of the Child Care and Family Care Leave Act, the Hitachi Metals Group introduced benefits exceeding the legal requirements, and we are working toward full implementation of these new programs.

Effort to Eliminate Occupational InjuriesIn 2009, there were two accidents involving lost work time at Hitachi Metals, and eight accidents across all Group companies (including one fatal case*), indicating that we were not able to significantly improve on the previous year, in which there were 4 and 7 accidents, respectively.For this reason, in 2010 we rolled out a program of health and safety activities across the entire Group based on the fundamental prin-ciple of "safety comes first." In addition to further improve the occupational safety management system, we strive to improve the safety awareness of every employee by conducting risk assessments suited to circumstances of each plant and Group company, KY (Kiken-Yochi, foreseeing danger) activities, and practical safety training.

No. of Employees (people) (people)


28

[Promoting Truthful Communication with Society]


With Society, Including Our Shareholders and Investors

The front cover of the Shareholders’ Newsletter for the 72nd Fiscal Period (left) and the top page of the Hitachi Metals web site

Business Information Website :Hercunite®

http://www.hitachi-metals.co.jp/automobiles/hercunite.html

Business Information Website:What is a pipe fitting?http://www.hitachi-metals.co.jp/tugite/index.html

Timely Publication of InformationTo earn trust as a highly transparent "open firm", the Hitachi Metals Group is working to enhance in-house systems to appropriately implement prompt, accurate and fair disclosure of company information and publish information in a timely manner.Divisions work together, centered on the Communications Office, to disclose quarterly operating and financial results information, and hold presentations including operating results briefing for institutional investors and analysts. This effort extends beyond infor-mation on operating results, and we also actively disclose information on topics by separate business and our medium-term man-agement plans.The Hitachi Metals Group communicates our management philosophy via shareholder newsletters, annual reports (English), corporate websites and numerous other communications channels.

Interactive Communications with Shareholders and InvestorsThe Hitachi Metals Group strives to achieve interactive communications with all of its shareholders and investors while providing infor-mation through a variety of communications tools such as advertisements, our website and various events.


29

[Promoting Truthful Communication with Society]


With Society, Including Our Shareholders and Investors

Website for personal investorshttp://www.hitachi-metals.co.jp/mms/index.html(in Japanese)

Shareholder and investor information websitehttp://www.hitachi-metals.co.jp/e/ir/indx_ir.html

Exhibition in "Eco-Products 2009"

ExhibitionsWe position exhibitions as valuable opportunities that enable us to communicate directly with a broad spectrum of interested parties. We also exhibit at IR events for personal investors, as a venue to introduce the details of our business to shareholders and investors and deepen their understanding of the Hitachi Metals Group.

Introduction to the Hitachi Metals Group IR websitesAs a tool to bring us closer to our shareholders and investors, we have established Internet websites designed for shareholders and investors as well as personal investors. On these sites we publish timely disclosure materials, annual reports, slide presentation mate-rials regarding operating results and other materials, and release information pertaining to operating results.We also have established an e-mail address just for IR purposes, which we are employing as one communications tool for listening to what our shareholders and investors have to say.


30

MelTogetherMel

MikeMel

Welcome, everyone!Thanks for taking us on the tour today!Today we’ll see how Hitachi Metals makes alumi-num wheels and magnets. Have you got your hel-mets on?

Wow, they’re so cool!Those are SCUBA® brand aluminum wheels, fea-turing Hitachi Metals’ unique combination of light-weight material and stylish design.Melting

Mike

Ally

Mel

Mel

MikeMel

Wow, this is what wheels are made from? It’ s all melted!It looks really hot. How hot does it have to get to melt?Around 660ºC, but that’s about half the tempera-ture at which steel melts. The wheels are made using low-pressure die casting, in which force is applied to push the molten aluminum directly into the mold to form the wheel.Heat TreatmentAfter the aluminum has hardened, it is heated again for fixed period of time to increase its strength and ductility. This is called the heat treat-ment process.

Finishing

Look at the wheels being filed!This is the finishing stage, where the surface is filed and polished.

Ally :Girl on factory tourMike :Boy on factory tourMel :Hitachi Metals tour guide

■Aluminum Wheels Manufacturing Process


31

Ally

Mel

AllyMel

PaintingLook at all the wheels lined up over there! The wheels in the back are being carried off some-where. What is happening there?After finishing the wheels are painted. This both protects the surface, and gives it a nice color. Wheels are a highly visible product, so making them look good is important.

Inspection

Are the wheels inspected before shipment?Of course. Aluminum wheels are important safety equipment, and are strictly inspected to ensure the safety of automobiles.

Mel

Ally

Mel

Mike

Mel

Ally

Mel

Now we’ ll see how magnets are made.

Magnets are used in all kind of things, aren’ t they, like cars and air conditioners and mobile phones?You really know a lot about it. For example, mag-nets are important parts for making electric motors move. Today I’ ll show you how we make NEOMAX® magnets, which are some of the stron-gest in the world.*

Really? The strongest in the world? How exciting!CrushingFirst, this powder is placed in the pressing ma-chine.Magnets are made from this powder ? It has extremely fine grains.That’s right. This powder is pulverized magnet alloy. It needs to be finely ground in order to make a strong magnet. Even these tiny particles have magnetic properties.

Magnet alloy is pulverized to create a raw powder with strong magnetic properties that is readily formed in a press.

■NEOMAX® Manufacturing Process

* Maximum magnetic energy under laboratory conditions 474kJ/m3 (59.5MGOe) (as of June 2008); Source :Rare Metal News


32

Mike

Mel

AllyMel

MikeMel

Pressing in Magnetic Field Wow, now it’s being pressed together. Is it OK?

Every thing’s fine. This is where the magnet is formed into a variety of shapes. But there’s still a bit of a secret here. The particles are being lined up.You line up the particles?The technical term for it is called "Pressing in Magnetic Field." Essentially, all the "heads" of the particles are aligned in the same direction. You know how in school the teachers will tell you line up in a straight line? It’s the same thing.All of these tiny particles have magnetic properties, so when they are all facing the same direction they become extremely strong. But they’ve really just been pressed together, so if you touch the block it will fall apart.Sintering and Heat TreatmentHot, hot, red hot, red hot!This is where the blocks are sintered, or baked into a fused solid at temperatures of more than 1,000ºC.

MikeMel

Mike

Mel

Mike

AllyMel

Ally

Mel

Together

Grinding and Surface Treatment

Hey, what’s going on here?The magnets are getting a makeover. They are finished into the exact size and shape ordered by the customer, and finally the surface is painted to prevent rust. All that’s left now is for the magnets to be inspected and shipped.

Huh? What’ s going on here? They don’ t stick together. Are these really the world’ s strongest magnets?Here, let me see that. We put it in this magnetizer, and... there. Now it’s a magnet.What did you do? Now they stick together. They’re really magnets! It ’s like magic! They’ re really strong. Let me see!Careful! You’ll get your fingers caught!That’s right. You can get your fingers caught or hurt yourself, so you shouldn’t play with NEOMAX® magnets.They’re small, but really powerful. Super-strong magnets are really amazing.So what did you think? Do you know all about alu-minum wheels and NEOMAX® magnets?It was a great tour! Thank you!

Pressing the raw powder in a magnetic field aligns the particles in the same direction, and creates a compressed body in a prescribed shape.

Magnets are cut and filed mainly with diamond-edged tools to create the desired size and shape.

The surface is finished to enhance long-term reliability. Hitachi Metals provides several types of surface treatments according the usage environment and application for NEOMAX® magnets.

The magnetic material is sintered at temperatures of more than 1,000ºC.


33


●Medium-to-Long-Term Environmental Strategy

Towards Global Environmental ManagementWhile taking into account the unique characteristics of each country and region, we aim to promote thorough understanding of basic environmental philosophy among Hitachi Metals Group companies, and expand activities to reduce the environmental burden, with a focus on the environmental risk management.

Global Warming PreventionTaking society’s need to reduce CO2 emissions as an opportunity, we aim to innovate our manufacturing processes, and strengthen our manufactur-ing technologies while simultaneously aiming to reduce CO2 emissions.

Expansion of Eco-ProductsOur mission is to contribute to the establishment of a recycling-oriented society by concentrating management resources on Eco-Products, for which the market demand is growing, and providing society with products that reduce the environmental burden, such as by reducing CO2 emis-sions, saving resources, and reducing hazardous substances.

Recycling of ResourcesWe are pushing forward multiple initiatives such as the reduction of the amount of waste by innovat ing the manufactur ing processes, development of uses for recycled waste, and recovery of used products.

●Environmental Objectives, Targets, and ResultsAlthough we could not achieve the targets in some environmental activities due to the influence of the sales decline and social trends following the Lehman shock, generally could meet the targets.

Quantitative Items

Reduction rate in CO2 emissions per unit (vs. FY2006, in Japan)

Eco-Management & Eco-MindGreen PointsCompletion rate of Eco-Mind training through e-learning

Registration rate of Eco-ProductsEco-Products sales ratio

Green supplier ratio (non-consolidated)

Resource recycling rate (in Japan)Net sales energy rate (in Japan)＊2

Reduction rate in VOC atmospheric emissions (vs. FY2000)

GREEN 21＊1

Reduction rate in CO2 emissions (vs. FY1990, in Japan)＊2

Reduction rate in water usage (vs. FY2005, per unit sales)

Eco-Products

Eco-Factories

Environmental Education

Expand Eco-Products

Reducing the Product Transportation Burden

Waste Reduction

Global Warming Prevention

Reducing VOC＊3

Conserving Water Resources

Category Environmental Objectives Indicators Fiscal 2009 Targets Fiscal 2009 Results Achievement level Fiscal 2010 Targets

Qualitative Items

Eco-Management & Eco-Mind

Held Hitachi Metals Group Environmental Committee meetingParticipation in the information exchange meeting in China for Hitachi Environmental Officers

Completion of the company-integrated EMS

Environmental cost : 8.63 billion yenEnvironmental effects (economic effects):2.43 billion yen

Environmental Management Promotion

Eco-Products

Eco-Factories

Promote environmental meetings

Implementation of Environmental Accounting

Implementation of Environmental Training

Our Response to Regulations on Hazardous Chemicals in Products

CompliancePromote "zero emission＊6" at works

Environmental Information Disclosure

Category Environmental Objectives Fiscal 2009 Results Achievement level

Environmental Management System (EMS)

Two incidents outside Japan (exceeding wastewater standards, deficiency in environment-related facility notifications)

Cooperation with Stakeholders

Social Contribution

Environmental effects (physical effects):Energy reduction 7,519 kℓ(crude oil equivalent) 　　　　　　　　　 :Waste Reduction 1,250 tonsEnvironmental Internal Auditor training : 24 people attendedEnvironmental Internal Auditor follow-up training :20 people attended

"Zero emission" achieved at 17 sitesHitachi Metals Group CSR Report 2009 issued

Exhibited at Eco-Products 2009

Held environmental discussions with various associationsWelcoming plant tours

Participation in local environmental preservation activitiesImplemented local area cleanup activities

Implement the Environmental CSR-Compliant Monozukuri structureImplement the SVHC＊4 survey concerning REACH regulation＊5

PR activities for Eco-Products

＊1 :Hitachi Group’ s mechanism for evaluating the achievement level for environmental activity targets ＊2 :The site subject to the target is a Type1 energy management designated plant in Japan ＊3:VOC:Volatile Organic Compounds ＊4 :SVHC:Substances of Very High Concern ＊5 :Registration, Evaluation, Authorisation and Restriction of Chemicals. An EU regulation that mandates registration and evaluation of chemicals manufactured and imported in the EU, and where the substance is a cause for concern mandates authorization and for particularly high-risk substances, applies restrictions. ＊6 :Final disposal volume is less than 1% of total generated volume

Exhibition in "Eco-Products 2009"We set up a booth at "Eco-Products 2009," held in the Tokyo Big Site, December 10 – 12, 2009. We exhibited our Eco-Products, such as rare earth magnets and target materials, to a broad array of v is i tors from pr imary school students to businessmen.

Regional clean-up activities300 employees from the Yasugi Works and the group companies in the Yasugi region participated in the "Clean-Up Yasugi Day" campaign.This is a clean-up activity run by the local government since 2006 with the aims of "environmental conservation" and "wise use" after the registration of the Shinji-ko and Nakaumi to the Ramsar Convention.

1,152 pt.85%

80%

(67%)

86%

10%

98.5%

1.126

10%

28.5%

8%

1,120 pt.99.8%

84.0%

(73.3%)

84.7%

21.1%

86.3%

1.216

36%

48.8%

▲15.3%

1,280 pt.90%

ー70%

90%

10%

99%

1.126

10%

30%

10%

: Target Achieved : Target 90% or More Achieved : Target Not Achieved

600,000

400,000

200,000

0

10

0

20

30

40

50

60

70

80

Net s

ales

(￥m

illion

)

Ratio

of E

co-P

rodu

cts

sale

s to

net

sal

es (%

)

200

400

600

800

1000

1200

1400

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0

CO2

emis

sion

s (K

t-CO

2/y

ear)

Net s

ales

ene

rgy

rate

(Kℓ

cru

de o

il equ

ivale

nt/m

illion

yen

)

2005 2006 2007 2008 2009 2010 2011 2012 1990 2005 2006 2007 2008 2009 2010 2011 2012

CO2 emissions targets

Global Warming PreventionExpand Eco-ProductsNet sales of Eco-Products (results)

Net sales of Eco-Products (projected)

Ratio of Eco-Products sales to net sales (results)

Ratio of Eco-Products sales to net sales (projected)

CO2 emissions (results)

CO2 emissions (projected)

Net sales energy rate (results)

Net sales energy rate (projected)

( )

34

[Eco-Management & Eco-Mind]

Hitachi Metals Group Basic Environmental Protection Policies

PhilosophyHitachi Metals’ fundamental corporate philosophy is to be "the best possible company" and to contribute to a greater society. In line with this philosophy, we regard it as crucial to ensure that humanity ’s shared environmental resources can be passed down to future generations in the best possible condition. Accordingly, throughout our operations we treat environmental considerations as an issue of the highest importance and strive actively to promote environmental protection efforts on both the global and local community levels.

Slogan●With a deep awareness that environmental protection is major issue for all humanity, fulfill social responsibilities by striving to establish

a sustainable society in harmony with the environment regarding it as one of the essential aspects of corporate activity.

●Contribute to society by developing highly reliable technologies and products in response to needs for environmental protection and the limited nature of resources.

Business Conduct Guidelines

1. Compliance with environmental laws and regulations, and prevention of pollutionComply with all applicable laws and regulations concerning environmental issues on all levels, from international laws to national, regional, and local pacts. Establish voluntary environmental standards as needed in order to assure compliance.Identify potential environmental problems and take action to prevent pollution. In the event that environmental problems have happened, take appropriate countermeasures to minimize environmental impact.

2. Maintenance of environmental organizational structure and enhancement of environmental supervisionMaintain an organizational structure that includes leadership by an executive responsible for managing environmental issues, as well as an underlying administrative structure. Promote environmental protection activities by applying voluntary environmental standards and establishing clear environmental-related goals.Additionally, strive to continually improve our environmental management through confirming that our environmental protection activities are being carried out in an adequate, effective, and proper manner.

3. Promotion of global manufacturing with consideration of LCA (Life Cycle Assessment)Endeavor to reduce the environmental burden at entire life cycle, including R&D, product design, manufacture, distribution, sale, use, and disposal.Promote the following as global manufacturing priorities : environmentally conscious products in society, prevention of global warming, conservation and recycling of resources, chemical management, as well as conservation of biodiversity.

4. Environmental consideration at the sites all over the worldConsider environmental impact in the areas around our manufacturing sites, and strive to carry out policies responsive to the requirements and needs of the local communities.

5. Education and training to increase environmental awarenessEducate and train employees about environmental protection and importance of compliance with environmental laws and regula-tions to raise employees’ awareness of environment with a broad perspective.

6. Information disclosurePromote positive communication through the disclosure of information regarding environmental protection activities to stakeholders, and strengthen the mutual understanding and collaborative relationship.

April 1, 2010

Hitachi Metals, Ltd.President and Chief Executive Officer

Hiroyuki Fujii


President & CEO

Executive Officer in Charge of Environmental Issues

Hitachi Metals GroupEnvironmental Committee＊

General Managers ofWorks

Environmental Committee Meeting

General Affairs OfficeEnvironmental Managers＊

Internal Environmental Audit Team

Specialty Division Meeting

Each Division

Environmental Managers＊

Engineering & Technology Center＊

General Managers＊

Each Internal CompanyCorporate

Board Member in Chargeof Environmental Issues＊

Board Member in Chargeof Environmental Issues

Same as Figure 1 Same as Figure 1

Environmental Conferences(Asia, Europe, the Americas)

Group Companiesin Japan

Group CompaniesOutside Japan

Figure 1

Special DepartmentalCommittee

["3Rs"＊1 Subcommittee][Energy Conservation Subcommittee][EMS＊2 Study Group]

35

[Eco-Management & Eco-Mind]

The Hitachi Metals Group environmental management promotion structure

Hitachi Metals Group’s Environmental ManagementThe Hitachi Metals Group’s Environmental Management is a structure where the Engineering & Technology Center, headed by an executive officer responsible for managing environmental issues of Hitachi Metals, Ltd., promotes environmental management in coordination with senior managers responsible for environmental issues in internal companies. In April 2005, we revised our Hitachi Metals Basic Environmental Protection Policies, and renamed them the Hitachi Metals Group Basic Environmental Protection Policies. We did this in order to clarify our stance that the entire group is united in its commitment to environmental management.In order to advance environmental management suited to a corporation that does business globally, we strive to ensure that the basic environmental policies are thoroughly shared in the Hitachi Metals Group, taking into account national and regional differ-ences. Our efforts to reduce environmental burden and our response to environmental risk are based on this shared policies.Policies and targets related to environmental activities are reviewed and revised annually at the Hitachi Metals Group Environmental Committee and Environmental Conferences held outside Japan.

An Integrated Environmental Management SystemThe Hitachi Metals Group has been acquiring ISO14001 certifications since 1998 and the ISO14001 certification acquisition rate is currently about 90% (on an employee base).Integrated company-wide environmental management system (integrated EMS) to meet the increased need for coordination between divisions (engineering, planning, and sales etc.) due to such factors as product-based environmental regulations and increased sales of Eco-Products. We completed the establishment of integrated EMS for all the companies in fiscal 2009.


＊Group Environmental Committee are attended by the executive officer in charge of environmental issues, senior managers responsible for environmental issues of each internal company, environmental managers at the Works, the general managers of corporate divisions, the directors of Group companies in charge of environmental issues, and the staffs of the Engineering & Technology Center.

＊1 3Rs:Reduce, Reuse, Recycle (promote efficient use of resources through the 3Rs)＊2 EMS:Environmental Management System

36

Environmental Training structure

Training for new employees

Training for mid-career employees

Training for managers

Environmental Internal Auditor training

Environmental Internal Auditor follow-up training

Training for risk communication

Qualification-based education

Training for environmental management staffs

On-site environmental education

Company sales education

e-learning

Hierarchy-BasedTraining

SpecializedTraining

Environmental issues and environmental preservation activities

Environmental issues and workplace responsibilities

Environmental issues and corporate roles

Environmental laws and regulations, EMS recognition and auditing skills

Audit planning, practice and training

Practice responding to stakeholders

Legal qualification examination training

Practical training of environmental management

Routine environmental management for general employees

Relationship between products and the environment

Eco-Mind training (HITACHI Group)

Environmental AuditingThe Engineering & Technology Center implements company-wide environmental auditing on how well environmental laws are con-formed to, the appropriateness of EMS operations, and environmental risks.We conducted environmental audits at eight sites in fiscal 2009, and confirmed that there were no major-nonconformities atany sites.

Environmental Education and Awareness PromotionHitachi Metals Group has built workplace-specific training and training systems as part of our EMS, and has established clearly defined roles for Group wide training and individual factory-level training for further improvement of the staff’s environmental aware-ness as well as the enhancement of knowledge and skills relevant to each workplace.


200

150

100

50

0

Fiscal 2009 Achieved

1,120GP

Fiscal 2009 Target

1,152GP

37

Target Levels

Hitachi Metals Group Results and Targets

Eco-Management (Environmental management)

Next-Generation Products / Service Strategy

Eco-Mind

Eco-Products(Eco-Products)

Eco-Factories (Resources recycling)

Environmental cooperation with stakeholders

Eco-Products(Green procurement)

Eco-Factories(Prevent global warming)

Risk management, action plans, environmental accounting

Staff training and education

Environmentally conscious products, Management of substances contained in products

Green procurement, green purchasing

Develop and expand sustainable businesses

Reduce energy consumption at operating facilities, develop environmentally conscious logistics strategies

Reduce waste, manage chemical substances

Disclose information, communication activities, world citizenship activities

Eco-Management-Environmental management

Eco-Minds

Eco-Products-Eco-Products

Eco-Products-Green procurement

Next Products /Service Strategy

Eco-Factories-Prevent global warming

Eco-Factories-Resources recycling

Environmental cooperation with stakeholders

No.

1

2

3

4

5

6

7

8

Categories Evaluation Elements

GREEN 21We are promoting the GREEN 21 system. The GREEN 21 system scores the level of achievement of environmental targets in order to continuously improve and raise the level of environmental activities, with the goal of improving our quality as an eco-friendly company.We have changed the scoring criteria twice, and since fiscal 2006 we have been using version 3 of the GREEN 21 system.Version 3 of the GREEN 21 system assigns scores to environmental activities in the following categories, in order to accurately ascertain our environmental activities.

GREEN 21 is a system of continuous action, evaluating the scores from the previous fiscal year, and using that to set the targets for the next year.

The Hitachi Metals Group’ s score for fiscal 2009 was 1,120 green points (GPs), which fell short of our target score of 1,152 GPs.The category in which we failed to achieve our target was Eco-Factories (Prevent of global warming). In this category, our score fell due to a lower investment in energy-efficient equipment than we initially planned for.We also received a low score in the "Environmental cooperation with stakeholders" category, for such activities as town meetings.

We will set targets for our activities in fiscal 2010 that take into account the results for fiscal 2009.

FY2005 FY2006 FY2007 FY2008 FY2009

640

643

768

821

896

944

1024

1086

1152

1120


Target

Result

38

[Environmental Accounting]

Results of Environmental Accounting

■Environmental Costs

■Environmental Effects

(¥100 million)

(¥100 million)

●Scope of disclosure:The Hitachi Metals Group in Japan

●Calculation period : April 1, 2009 to March 31, 2010

Prevention of air pollution and water pollution, etc.

Global warming prevention, energy conservation

Reducing and recycling waste, conservation of water

Green procurement expenses, recycling of containers and packaging

Implementation and maintenance of EMS, operation of environment-related department

Research and development for the reduction of the environmental impacts caused by products and manufacturing processes

Supporting nature protection and local environmental activities, disclosing environmental information

Details

Cost ClassificationFY2007 FY2008 FY2009

Expense Investment Expense Investment Expense Investment

FY2007 FY2008 FY2009ItemWaste Processing and Recycling

Energy Conservation

Others

EconomicEffects

Total

ItemEnergy Saved (Crude oil equivalent)

Waste ReductionPhysicalEffects

FY2007 FY2008 FY2009

14.7

2.7

20.9

38.2

1.5

9.0

36.8

0.6

0.7

86.7

2.7

4.1

0.5

7.3

0

0

7.8

0

0

15.1

13.8

2.4

19.6

35.9

1.2

8.4

33.6

0.2

0.9

80.1

1.0

1.8

0.6

3.4

0

0

6.2

0

0

9.6

13.1

3.3

16.1

32.4

0.9

7.3

31.7

0.1

0.6

73.1

1.0

3.5

0.2

4.7

0

0

8.5

0

0

13.2

25.5

2.1

3.0

30.7

21.6

1.1

2.4

25.1

19.5

2.7

2.1

24.3

5,684kℓ1,027t

5,449kℓ1,283 t

7,519kℓ1,250t

Analysis of Results for Fiscal 2009

●Environmental CostsOur environmental costs in fiscal 2009 totaled ¥8,630 million, with expenses accounting for ¥7,310 million and investments accounting for ¥1,320 million. Our reductions of the waste and other emissions reduced their concomitant costs, while our investments increased for energy-efficiency measures and R&D of Eco-Products.●Environmental EffectsOur increased investment in energy-efficiency measures had a large effect for our energy efficiency. Meanwhile, by reducing our waste emissions, we reduced the effect from resource recycling (e.g. from the sale of waste materials).

The Hitachi Metals Group has introduced environmental accounting in order to assign corporate resources appropriately, streamline our environmental investment and environmental activities, and promote continuous improvement of environmental activities. It also aims to increase the understanding of our stakeholders by disclosing information about the effect and efficiency of our activities.Environmental costs include things like environment-related capital investment, equipment maintenance and administration costs, and R&D costs. Environmental effects include both economic effects, which are measured in monetary terms, and physical effects, which are measured in terms of environmental impact.

We received the top rating in an environmental responsibilityAs a first entity for the special steel sector, Hitachi Metals, Ltd. received the highest level environmental rating from the Development Bank of Japan*1, indicating "advanced environmentally-friendly initiatives are particularly noticeable." We received particularly strong evaluations for our approval standards for Eco-Products, with the introduction of "Eco-Design Assessment," and our progressive objectives and targets for sales of Eco-Products.

*1: Financial institutions that conduct an environmental management survey to determine a score for a company’s environmental management ability and reflect this score in their lending conditions.

BusinessAreaCosts

Pollution Prevention

Global Environmental Preservation

Resource Recycling

Upstream and Downstream Costs

Management Activity Costs

Research and Development Costs

Community Activity Costs

Others

Total

Subtotal


39

[Eco-Products]

33

The Hitachi Metals Group aims to contribute to the establishment of a recycling-oriented society, providing society with products that reduce environmental burden through reducing CO2 emissions, conserving resources, and reducing hazardous substances.

Environmentally Conscious Vision for Products and ServicesAs stated in the Hitachi Metals Group Code of Conduct, we are conscious of the environment that we will pass on to future genera-tions, and we offer high-quality, environmentally friendly products by creating new products and businesses that generate new value. Our management vision focuses on creating new environmentally friendly products, with a target that by 2015, 30% of our net sales will be from new products.

Expansion of Eco-ProductsThe Hitachi Metals Group has incorporated the "Eco-Design Assessment" process in the designing and developing of products for reducing the environmental burden of the products. The eight items that consider all of the life cycles of the products are evaluated, and the products that meet the standards are approved as Eco-Products.73.3% of our consolidated net sales in fiscal 2009 were from Eco-Products.

R&D Case StudiesField Environmental key words

Energy

Automobiles

Electronics

R&D field

Amorphous metal materials for low-loss transformers and metal materials for solar cellsParts and materials for wind power, and low-loss magnetic components for AC/DC converters

Ultra heat-resistant metal materials, fuel-cell components, and hydrogen-related materials

Battery components

Components that help clean exhaust gas

Light casting, heat-resistant casting, and lightweight engine components

Magnetic materials for compact high-performance actuator

Magnetic materials for motors, packaging materials, and low-loss soft magnetic materials

Radio front end module, and malti-layer ceramics components

Magnetic components for EMC

Materials / Products free from hazardous substances

Efficient power generation

Electricity storage

Regulations on hazardous substances

EMC＊1

Hybrid, Electric cars

More compact, lighter weight

Electric power

Reduced weight & fuel-efficiency regulations

＊1 EMC: Electro-Magnetic Compatibility

Reduced CO2 emissions

Exhaust gas regulations


600,000

400,000

200,000

0

10

0

20

30

40

50

60

70

80

Net S

ales

(mill

ion)

Prop

ortio

n of

sal

es fr

om E

co-P

rodu

cts

(%)

2005 2006 2007 2008 2009 2010 2011 2012

Sales from Eco-Products (results)

Sales from Eco-Products (projected)

Proportion of sales (results)

Proportion of sales (projected)

40

Eco-Design Assessment

Participating in ExhibitionsThe Hitachi Metals Group participates in various exhibitions and introduces its environmentally conscious technology, products, etc.The Group tries to show how its products contribute to the reducing of environmental burden.

Green procurement, enhancing of chemical substances management, reducing of chemical substance risks

Improvement of productivity, adoption of energy conservation equipment, fuel conversion

Use of recyclable resources, recycling of waste, reduction of waste generation

Reduction of environmental burden on local area

Elimination of hazardous substances, reduction of chemical substance risks

Improvement of efficiency, less emission, higher added value

Improvement of resource efficiency

Provision of environmental information, packaging materials, transportation burden, disposal degradability

Environmental consideration during production stages (chemical substances)

Environmental consideration during production stages (energy conservation)

Environmental consideration during production stages (resource conservation)

Environmental consideration during production stages (pollution measures)

Environmental consideration in products (chemical substances)

Environmental consideration in products (energy conservation, etc.)

Environmental consideration in products (resource conservation)

Environmental consideration during sales, distribution, and product disposal

Evaluation Items Evaluation Points

April 8~11, 2009

April 15~17, 2009

April 15~17, 2009

May 20~22, 2009

June 24~26, 2009

July 29~31, 2009

August 21~22, 2009

September 10~12, 2009

October 6~10, 2009

October 23~ November 4, 2009

October 28~30, 2009

December 10~12, 2009

February 15~17, 2010

March 3~5, 2010

INTERMOLD 2009 (Tokyo)

TECHNO-FRONTIER 2009, The 22nd EMC JAPAN 2009 (Makuhari)

TECHNO-FRONTIER 2009, The 27th MOTORTECH JAPAN 2009 (Makuhari)

People and Car Technology Expo (Yokohama)

PV Japan 2008 (Makuhari)

The 41st Plumbing & Sanitary Materials and Equipment Show (Tokyo)

Mirai-ichi 2009 (Tokyo)

The 14th Plumbing & Sanitary Materials and Equipment Show (Osaka)

CEATEC JAPAN 2009 (Makuhari)

41st Tokyo Motor Show 2009 (Makuhari)

FPD International 2009 (Yokohama)

Eco-Products 2009 (Tokyo)

11th Materials / Equipment for Air-Conditioning, Sanitary and Insulation Exhibition (MACS) (Tokyo)

FC EXPO 2010 – International Hydrogen & Fuel Cell Expo (Tokyo)


41


Staff at Metglas, Inc. who support cutting-edge clean energy businesses

HPM-MAGIC® is a new steel material developed as a mold material for mass producing resin products for household goods, IT devices and automobiles. It produces a smaller environmental burden while offering a good balance of the characteristics required for molds, including strength, break-resistance, ease of machining, and finished surface appearance. The mix-portion of trace constitu-ents in metal materials were optimized, new heat treatment process added, and improvements were made to both the dura-bility (strength and toughness) and ease of machining, which it is difficult to take advantage of both characteristics. Meanwhile in the manufacturing process, the number of times of the melting process, required to ensure the mirror-finish, has been reduced from two to one. Furthermore, simplifying the hot working and heat treatment processes, we have succeeded in minimizing the variability in all types of characteristics, and greatly reduced the environmental burden.

New plastic mold steel HPM-MAGIC® received the Best 10 New Products Award’s "Monodzukuri Prize"

The Specialty Steel Company’s new plastic mold steel "HPM-MAGIC ®" won the 52nd (2009) Best 10 New Products Award’s "Monodzukuri Prize" (Nikkan Kogyo Shimbun). The prize is awarded to products that support craftsmanship (monodzukuri).

In January 2010 the US government announced that they would provide tax deductions targeting the US clean energy production businesses, as part of the Advanced Energy Manufacturing Tax Credits established under the Recovery Act.Metglas Inc. was chosen alongside Alstom, DuPont, GE, Siemens, Dow Chemical, etc., as a beneficiary of these tax credits. Transformers using amorphous metal materials made by Metglas, Inc. contribute to reductions in CO2 emissions generated when electricity is produced, by reducing the energy loss in the power distribution network. This tax credit approval is proof that the US government recognizes Metglas Inc., which produces amorphous meta l mater ia ls , as an "advanced energy manufacturing company" that contributes to the production of c lean energy. Further, amorphous metal mater ia ls are manufactured in two plants in Japan and the US in a system that allows us to supply to the whole world.

Metglas, Inc. contributing to reduce CO2 emissions

The continued efforts of Metglas, Inc., which produces amorphous metal materials, have been recognized by the US government

42


●Refining technology allows the TiN size of an order lower by one digit.●Reduction of the number of ring belts allows cost reduction.

Miniaturized nonmetal inclusions (Nitrides)

Developed material Normal material (at same magnification ratio)

Element

Structure drawing of a CVT belt Repeated bend fatigue strength

Ring beltThe number repeating

Subsidiary fractures caused by inclusions

Material currently under development

Conventionalmaterial

107

Load stress

Fig. Schematic view of CVT belt Fig. Schematic S-N curves of fatigue strength

Improvement of fatigue property may lead to a reduction in the number of ring belts.

●CVT＊1 allows fuel consumption improvementby about 7%CVT does not use gears, but makes automatic continuously variable speed possible. As a result,automobile fuel consumption is lower, reducingCO2 emissions.

●High reliability of the material contributes toenhanced use of CVTExcellent melting technology and cold rolling technology allow the detoxification of nonmetalinclusions and surface discontinuity that causesubsidiary fractures. Our ring material retains anunparalleled market share for ring material for CVT belts manufactured in Japan (as of March 2010).

Roll CompanyDiesel Particulate Filter

This filter reduces the amount of particulate matter (PM) in the exhaust gas of medium-and heavy-duty diesel engines. It helps meet exhaust regulations that are increasingly stringent worldwide.

●Reduces release of particulate matter into the atmosphereExhaust gas is passed through micro pores in the filter, which capture particulate matter (PM) emitted by the diesel engine, reducing the release of PM into the atmosphere.

●Reduces CO2 emissions through high fuel efficiencySophisticated control of the micro pores provides not only superb capture performance, but also low pressure loss,which reduces fuel consumption.

5μm 5μm

＊1: CVT (Continuously Variable Transmission)

Specialty Steel CompanyRing material for CVT belt

Metal belt material with excellent fatigue strength, developed for CVT, contributes to CO2 reduction through its low fuel consumption performance.

43

Note:This tool has low electric conductivity due to the properties of its PN coating. Caution is thus requiredwhen using tool-measuring systems that use electric transmission for measurement.

*1 EMC: Electro-Magnetic Compatibility

Hitachi Tool Engineering Ltd.Epoch PaNacea Series

This heat-resistant coating material was given excellent adhesion to tool substrates by optimizing the aluminum (Al) content. It exhibits high hardness (3000 HV) and good wear resistance due to doping of the AlCr coating membrane with Si.

● It has an excellent cutting life with materials like plastic molds where tool seizures are frequent. (Twice the cutting life of our previous product)

● It has a long cutting life with materials such as HPM-MAGIC®, as well as prehardened steel, carbon steel, SUS, SKD61, and SKD11.

●Its improved heat resistance also gives it a long life for wet and dry cutting.

Information System Components CompanyFINEMET® EMC*1 and Noise Reduction Components

As IT devices and electronics continue to grow more compact, capable, and high-performing, EMC regulations are becoming increasingly stringent. This has created a demand for EMC and noise-reduction components with high performance as well. Hitachi Metals offers its FINEMET ® series of nanocrystalline soft magnetic materials for high-performance EMC and noise reduction.

●Helping make products more efficient and compactFINEMET® features high magnetic density, high magnetic permeability, and low loss. These features enable this environmentally friendly material to make products more efficient and compact.

●Complies with RoHS directiveThis material is lead-free and RoHS compliant.


Cutting Area High hard material

General-purpose performance

High performance

Soft steel

New TH Coating Series for High Hardness

TH Coating Series

Epoch PaNacea seriesCovers all areas of general-purpose products to date!!

44

Soft Magnetic Materials CompanyAmorphous Metal - Metglas®＊1 2605SA1

Amorphous Metal for the reduction of carbon dioxide emissions

●FeaturesApproximately 1/3＊2 of no-load loss compared with grain oriented electricalsteel Realization of mass-production of wide amorphous metal ribbon withexcellent melting and casting technology

●What is Metglas®?Metglas® is an amorphous (none-crystalline) metal. And it has randomatomic structure having absence of regular structure.

1) It has no crystal magnetic anisotropy; this enables it to be magnetizedsmoothly, which gives it excellent soft magnetic properties (The mag-netic domain can be moved easily when it is magnetized) (See graph at the top right)

2) It is very thin (about 25 microns), which is about 1/10th the thickness ofgrain-oriented electrical steel sheets

3) It has over twice the electric resistance of grain-oriented electrical steelsheets (130 µΩcm);

this gives it low no-load loss＊1: Metglas® is the registered trademark of Metglas, Inc.＊2: R&D News of Chubu Electric Power, No.129/2008-1,

http: //www.chuden.co.jp/resource/corporate/news_129_N12913.pdf

NEOMAX CompanyNeodymium (Nd) sintered magnet NEOMAX®

NEOMAX® is high-performance Nd sintered magnet that Hitachi Metals developed ahead of the rest of the world.＊1 ＊2

●Contributing to downsizing and higher performance of motorsNEOMAX® has been adopted for compressor motors of air conditioners, drive motors for hybrid cars, and head driving motors for HDDs, contributing to downsizing and higher performance of motors.

●Contributing to energy conservation for a wide varietiesof fieldsThe wide product lineup, for example, normal materialsexcellent for cost-effectiveness, superhigh-performanceHILOP®, radial anisotropic ring magnet, multi-pole oriented magnet, and the surface treatment technologies suitable for the application, allows various applications that are more energy efficient for use in a wide varieties of fields.

＊1: The company name at the time of invention (1982) was Sumitomo Special Metals Co., Ltd.; the business was integrated into Hitachi Materials, Ltd. in April 2007.

＊2: The magnet achieved a world record, the maximum energy product 474KJ/m3

(59.5MGOe)("Rare Metal News", Vol. 2224, 2005)

Amorphous Metal

DC B-H Loop Comparison


The price index is linked to the prices of rare metals, such as nickel.

HERCUNITE®-S

HERCUNITE®-5S（Niresist D5S）

HERCUNITE®-MX

HERCUNITE®-F5N

HERCUNITE®-A3N

HERCUNITE®-A5N

HERCUNITE®-A3K

HiSiNo-DCI（Ductile cast iron）

45

600 700 800 900 1,000 1,100Metal surface temperature (oC)

Price index

Components of pipe fittings galvanization

Diesel-exhaust gastemperature≦850oC

Gasoline-exhaust gastemperature≦1,050oC

＊1 :HERCUNITE®: (Heat Resistant Cast Materials for Unit of Exhaust parts)

*HERCUNITE®-S is a general term for the Company’s series of heat-resistant cast steels, which consists of HERCUNITE®-F5N, -A3N, -A3K, and -A5N.

Automotive Components CompanyHERCUNITE®-S Heat-Resistant Cast Steel for Engine Exhaust Parts

Exhaust gas temperatures are relentlessly increasing a means to improve the fuel efficiency of vehicle engines.Capable of enduring temperatures up to 1,050°C, HERCUNITE®＊1-S reduces the environmental impact of vehicle.

●Heat-resistant materials able to withstand high exhaust gas temperaturesHERCUNITE®-S is heat-resistant cast steel with optimal heat-resisting performance, part ofthe HERCUNITE® series, which are materials for parts of vehicle exhaust systems. Itfeatures superior resistance to oxidation, heat deformation, and heat cracking.

●Contribution to smaller, lighter and more environmentally friendly enginesVacuum-thin wall casting technologies developed by Hitachi Metals result in walls with thick-nesses of 2.5 mm or thinner, proving lighter exhaust manifolds and turbocharger housings.

●Comprehensive handling from product design through product assessment Provide support from the proposal of materials and shapes, to prototyping and evaluation of finished engines, in accordance with the engine’s design requirements.

Piping Components CompanyEco Galvanized Cast Iron Pipe Fittings

Hot-dip galvanized malleable cast iron pipe fittings (cast iron fittings) are mainly used with piping components for such applications as firefighting, air conditioning, and machinery. They are galvanized (dipped in molten zinc) in order to rust-proof their surfaces. We developed galvanization technology using a type of zinc with low lead and cadmium content, in order to contribute to the environment.

●Large reduction in lead and cadmiumWe have greatly reduced the amount of lead and cadmium contained in theplating by using a highly pure form of zinc. As a result, our Eco Galvanizedproducts pass the regulations of the RoHS Directive.

●No need for new heavy metal additivesWe have established a mass-production technology by developing our ownunique manufacturing equipment and preprocessing methods that eliminatethe need to add heavy metals in place of lead.

●Same appearance and performance as conventional galvanizationIn addition to meeting the JIS standard for cast iron pipe fittings (JIS B 2301), this galvanization has the same glossy appearance as conventional galvanization.

Lead (Pb) Cadmium (Cd)

Eco GalvanizedCast Iron Pipe Fittings

< 0.1% < 0.01%

HERCUNITE® products

Modeled product design

Thermal fatigue tests (exhaust simulator)

Heat-resistant materials for exhaust parts

Eco galvanizedEnvironmentally friendly cast iron pipe fittings


46

Hitachi Metals Techno, Ltd.Hitachi Oil Sealed Chain

Hitachi oil sealed chain helps reduce environmental burden in a wide range of industrial fields, including transport systems and construction machinery, because in addition to using a sealed structure with lubricant oil between the pins and bushes, it does not need to be lubricated.

●No lubrication requiredAfter the equipment goes into operation, the chain’s estimated lifetime (nomore than 2% pitch elongation after 10,000 hours of operation) can bereached without lubricating to the chain.

●Protects the surrounding environmentThe chain construction seals in lubricant oil. This prevents lubricant oil fromflying out when the equipment is in operation, eliminating concerns overpolluting the environment around the equipment with oil.

●Improved productivityThe equipment can be operated more efficiently because there is no need tostop the equipment in order to lubricate oil. This helps improve productivity.


Pin link plate

Bush link platePin

Special seal

Lubricant oil inlet

Bush

Roller

3

2

1

0

Pitc

h el

onga

tion

(%)

Hours of operation

Boundary pitch elongation: 2%

2,000 4,000 6,000 8,000 10,000 12,000

Hitachi oil sealed chain

Chain with regular oil resupply

47

[Eco-Factories]

The Hitachi Metals Group Material Balance of Fiscal 2009 (Global)

＊1 BOD:Biochemical oxygen demand＊2 COD:Chemical oxygen demand＊3 SS:Suspended solid. SS are undissolved solids suspended in water＊4 Hazardous substance :Substances targeted by the PRTR Law in Japan

This is a graphical representation of the balance of materials in manufacturing processes at Hitachi Metals Group for fiscal 2009. The Hitachi Metals Group is promoting the reduction of the environmental burden in two directions: reducing the volume of inputs through the efficient use of resources and energy, and reducing the volume of outputs by controlling atmospheric releases and wastewater discharges, reducing and recycling waste, and so on.

Input of Primary Materials

INPUT

OUTPUT

Recycle

ReuseHitachi Metals Group

451kt

Input of Energy

494,747kℓ (Crude oil equivalent )

Input of Water Resources

12,034thousand m3

Transfer of WasteAmount of Reused / Recycled Resources

Final disposed volume

Products

242kt

188kt

50kt

Released to the Atmosphere

CO2 : 997ktSOx : 84tNOx : 278tHazardous Substances＊4 : 156tVOC : 455 t

Released into Water

Total volume of wastewater :11,0961thousand m3

BOD＊1 : 26.2 tCOD＊2 : 68.0 tSS＊3 : 5.6tHazardous Substances＊4 : 3.1t

High-Grade Metal Products and MaterialsElectronics and IT DevicesHigh-Grade Functional Components and Equipment


Global Warming PreventionThe Hitachi Metals Group is a materials manufacturer and uses much energy in its manufacturing processes. For this reason, the Group has positioned the prevention of global warming as a management priority. The Group established medium-to long-term targets and is working to reduce CO2 emissions and promote energy conservation measures through efforts such as project activities.

Points of the Activities●Enhance manufacturing (improve productivity,

reduce defects, improve product yields, etc.)● Improve operating efficiency of combustion

furnaces●Review energy sources●Enhance equipment management at manufac-

turing sites

In addition, we are involved in activities such as introducing renewable energies (solar power gen-eration) and energy conservation in distribution, and are actively promoting the prevention of global warming.

Changes in CO2 Emissions and Net Sales Energy RateIn fiscal 2009, the Hitachi Metals Group’s CO2 emissions were 640,000 t-CO2 from its target sites in Japan, and 313,000 t-CO2 from its target sites outside Japan*2. At its target sites in Japan, the emissions were 36% lower than their fiscal 1990 levels. These emission levels are calculated using the CO2 emission factors for each power company, in accordance with the April 2006 revi-sions to the Act on Promotion of Global Warming Countermeasures. Using the previous metric of the forecast (0.36t-CO2/MWh) by the Industrial Struc-ture Council of the Ministry of Economy, Trade and Industry (METI), this is a 37% reduction from fiscal 1990.The Group’s net sales energy rate deteriorated from fiscal 2008 to 1.216, due to the drop in pro-duction. This level is 3% lower than fiscal 1990.The Group’s main energy-efficiency measures in fiscal 2009 included improving the operating efficiency of its combustion furnaces and prevent-ing loss via insulation.

Visions for Preventing Global WarmingThe Hitachi Metals Group has set the medium-term targets shown on the right for fiscal 2012.In order to reach these targets, it is rolling out initiatives to reduce CO2 emissions linked to manu-facturing.

48

FY1990

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0FY2005 FY2006 FY2007 FY2008 FY2010

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0

CO2 emissions(kt-CO2/year)

FY2009 FY2012

CO2 emissionstargets(in Japan)

Targets for Fiscal 2012 in Medium Term Environmental Action Plan*1

1. Reduce net sales CO2 emission rate by 1% per year(Actual for FY 2009 was 2.284; Target for FY 2012 is 2.216 or less)

2. Reduce CO2 emissions by 10% (from FY 1990 levels)(Actual for FY 1990 was 1,000,000 t-CO2; Target for FY 2012 is 790,000 t-CO2 or less)

Fiscal 2009 Results

1. Net sales CO2 emission rate: 2.284(Net sales energy rate: 1.216 (3% reduction from FY 1990))

2. CO2 emissions: 640,000 t-CO2 (36% reduction from FY 1990 levels)

*1 Object sites for the targets:Type 1 Energy Management Designated Works in Japan (about 97% ofCO2 emissions in Japan)

*2 The Group companies outside Japan and Japanese sites exceptType 1 Designated Energy Management Works.

FY2011

374 361

179

175 171 170

412

124

402

357

115

821

749 759 761 713

104

536595

120

630

128

662

1.252 1.242

1.145

1.0441.064

1.204 1.192 1.1801.216

Net sales energy rate(kℓcrude oil equivalent / million yen)

Net sales energy rate (in Japan)

Group Companies outside Japan, etc. CO2 emissions

Group Companies in Japan CO2 emissions

Hitachi Metals, Ltd. CO2 emissions

Medium- and long-term targets


Reduc ing the Env i ronmenta l Burden o f TransportationThe Hitachi Metals Group is engaged in reducing the environmental burden of transportation through various means, which include modal shifts and improved loading ratios (Hitachi Metals, Ltd. is a "designated shipper" under the law).In fiscal 2009, the Hitachi Metals Group generated 19,811t-CO2 emissions from transportation in Japan, which is 30% lower than the previous fiscal year. Mean-while, due to the decline in production, the volume shipped as 134,645,000 metric tons, which was 31% lower than the previous fiscal year. As a result, our ship-ping volume emissions rate increased by 2.6%.Our main measures to reduce emissions from transpor-tation included reducing the number of trips by increas-ing load ratios; modal shift (shifting from truck to rail transport); and reducing transportation distances.We will continue to work to track our shipping load more precisely, as well as propose plans for further reductions and further reduce our environmental burden from trans-portation.

49

Changes in transport-generated CO2 emissions and transportation burden energy rate (in Japan)

Tran

spor

t-ge

nera

ted

CO2

emis

sion

s (t-

CO2 )

Tran

spor

tatio

n bu

rden

ene

rgy

rate

(kg

-CO

2/t

-kg)

Transportation burden energy rate

CO2 emissions

FY2006 FY2007 FY2008 FY2009

50,000

40,000

30,000

20,000

10,000

0

0.2

0.15

0.1

0.05

0


SlagDustSludgeGlass and Ceramics

Waste PlasticWaste OilScrap MetalOther

Reducing WasteVision Concerning Waste ReductionThe Hitachi Metals Group has long been committed to the creation of a recycling-oriented society by preventing the illegal disposal or dumping of waste, and helping to improve resource productivity, recycling rates, and reduce final disposal volumes as laid out in the 2nd Basic Plan for Establishing the Recycling-Based Society, and also reusing and recycling waste internally.Specifically, we worked to achieve our target of zero emissions＊ by fiscal 2010, but our volume of final disposal increased from fiscal 2008. This was due to decreased demand for road materials and other construction materials, major applications of recycled waste, due to such factors as the economic recession and decreased public works spending. Moving forward, we will continue to advance activities in accordance with our policies. Additionally, we will create projects that advance multifaceted initiatives, further reduce waste, and recycle resources, including developing new applications for resource recycling, and considering innovations to manufacturing processes. We are also considering such topics as the ideal way to recycle resources, including collecting used prod-ucts. We will then incorporate measures to improve our resource recycling rate and other factors into our next set of measures.

Results of Waste ManagementIn fiscal 2009, the Hitachi Metals Group in Japan produced a total of about 178,000 tons of waste. It recycled approximately 154,000 tons into resources, and sent approximately 24,000 tons for final disposal. This resulted in a resource recycling rate of 86.3%. Additionally, the Group achieved zero emissions at 17 business sites.Although the Group’ s emissions were 62,000 tons lower than in fiscal 2008, the final disposal level increased by 16,000 tons.The main increase in final disposal was from slag, dust and sludge, due to reduced demand for road materials, concrete aggregate, and other construction materials. Moving forward, we believe that it will be necessary to consider measures to replace these uses for recycled resources, and work to create stable resource-recycling pipelines.Note that dust containing cobalt, chromium, tungsten, and other materials is reused internally as a raw material in special steel. Dust containing nickel and other materials is also reused externally as a raw material in specialty steel.

＊Zero emissions : Deemed to be a final disposal volume no greater than 1% of total emissions.

32.1%

54.0%

14.4%

24.8%

1.5%6.1%

6.9%

1.4%2.3%

46.4%

3.2%

0.4%1.0%0.1%0.6%

4.8%

50

Total waste volume generated fromproduction processes other thanmanufactured goodsDirect and post-processing landfill disposal volume Recycled volume includes Reuse volume

TotalGeneratedVolume:178 kt

FinalDisposalVolume:24 kt

Final Disposal Volume

Recycled Volume

Total Generated Volume

Recycle Rate

Group Companies outside Japan

Group Companies in Japan

Hitachi Metals, Ltd.







Hitachi Metals Group (in Japan)

FY2006 FY20070

100,000

200,000

300,000

400,000t /year

100

75

50

25

0

%Recycling Ratio

94.297.3

FY2008

96.6

FY2009

86.3

Trends in Waste and Resource Recycling RatesBreakdown of Waste Generated(Hitachi Metals Group)

Total Generated Volume:

Final Disposal Volume:

Recycled Volume:

Recycle Rate: Recycled volume ÷ (Recycled volume + Final disposal volume) ×100


Initiatives to Achieve "Zero Emission"Hitachi Metals was quick to engage in waste reduction and recycling by starting to reuse of casting sand and recycling casting dust and waste sand as roadbed material in a company-wide project in fiscal 1979.Currently, the 3Rs Subcommittee positioned under the Environmental Committee is the focus for expanded activities aimed at zero emissions from all waste. From fiscal 2008, to achieve "zero emission" the Group is focusing on reuse of slag, dust and sludge, for which final disposal volumes are still high.

51


Shimane Prefecture established the "Shimane Hatsu Construction Brands" registration system to support expansion of new technologies and new manufacturing methods developed by the Prefecture’ s construction companies into markets nationally. At present 15 products are registered and the slag produced as a by-product of the steel manufacturing process at the Yasugi Works is registered as an "electric furnace oxidation slag aggregate." This aggregate has a high specific gravity and a low coefficient of water absorp-tion, while its aggregate expansion is small, so it is ideal for ocean construction works. To date about 40,000 tons of the material has been used in ocean construction. (Uses:Concrete production, wave damp-ing blocks, artificial fish reefs, algal reefs, etc.)

Aggregate that uses slag from the Yasugi Works is registered as a "Shimane Hatsu Construction Brand"

Survey on nurturing marine plants and algae Kombu seaweed vegetation survey

Ocean blocks utilizing electric furnace oxidation slag aggregate

Reduction of Substances of Environmental Concern

PRTR (Pollutant Release and Transfer Register)Of the volume of substances handled that are the subject of PRTR Law, chromium, nickel, cobalt, manganese, molybdenum and boron are regulated by the law and are essential raw materials for Hitachi Metals’ products. These six substances constitute approximately 99.0% of the regulated materials handled by the Group, and 82.9% of the total amount transferred.Of this total amount of release, 71.7% was released into the atmosphere and 97.3% of atmospheric release were comprised of three Volatile Organic Compounds (VOCs), which are toluene, xylene and ethylbenzene.

Volume handled : 32,981t Volume consumed :32,512tVolume released : 216 t Volume transferred :253t

Toluene

43.9%

Xylene

47.3%

Manganeseand its

compounds20.0%

Volumetransferred:

253t

Volumereleased:

216t

Consumed98.6%

Transferred0.7%

Released0.6%

Other1.0%

Boron and its compounds2.0%

Cobalt and its compounds2.4%

Molybdenum and its compounds4.6%

Manganese and its compounds5.0%

Landfill at own site27.1%

Other

17.1%

Boron and its compounds

0.8%

Cobalt and its compounds

1.1%

Nickel / nickel compound

11.4%

Molybdenum and its compounds

4.7%

Sewage system0.0%

Soil0.0%

Public watersystem

1.2%

Atmosphere71.7%

Waste100%

Other

2.7%

Ethylbenzene

6.1%

Nickel/nickelcompound

51.2%Chromium andchromium (Ⅲ)compounds

33.8%

52

PRTR in fiscal 2009 (in Japan)

Volume Consumed, Released and Transferred Breakdown of Volume Handled

Breakdown of Volume Released and Transferred

Volumehandled:32,981t


Chromium and chromium (Ⅲ)compounds

44.9%

53

PRTR data (in Japan)

Changes in Reducing VOC emissions

Rate of reduction (%)

1,200

1,000

800

600

400

200

0

60

40

20

0

VOC emissions volume (t/year)

FY2000(Results)

FY2007(Results)

FY2008(Results)

FY2009(Results)

FY2006(Results)

FY2005(Results)

FY2004(Results)

FY2010(Projected)

In kg/year

Note: The scope of data collection was revised in fiscal 2008.

VOC emissions volume (outside Japan)

VOC emissions volume (in Japan)

Rate of reduction (compared with 2000)


Reductions of Volatile Organic Compound (VOC) EmissionsThe Hitachi Metals Group is working on measures to reduce VOC emissions, aiming for a 30% reduction of these emissions by fiscal 2010 compared with fiscal 2000. The major part of the VOC emissions by the Hitachi Metals Group come from solvent components that are used for product coating. Efforts in technical investigations and changes in the equipment have been made to find substitutes for coating materials. Emissions to the atmosphere of VOCs in fiscal 2009 were reduced by 48.8% compared with fiscal 2000.

＊Total of substance handled 1 ton per year or greater

Ordinance number Chemical substance CAS No. Released

to theatmosphere

Volumehandled Released

to publicwater system

Released to soil

Totalreleased

Transferto sewage

system

Transferas waste

Totaltransferred

Disposal to landfill at own site

43,627

23,892

115,653

40,633

11,161,215

782,630

2,771

2,801

105,147

11,808

16,804,020

73,020

4,275

2,511

11,889

647,026

2,414

1,634,535

1,511,078

32,980,944

0

9,493

73,100

5

5

2

0

2,270

67,894

45

68

25

0

104

52

0

1,573

43

1

154,677

0

0

0

0

654

1

0

0

0

0

0

366

0

0

0

1,166

0

491

0

2,678

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

11,266

0

0

0

0

0

0

37,086

0

0

0

8,848

0

1,145

44

58,390

0

9,493

73,100

5

11,925

2

0

2,270

67,894

45

68

37,477

0

104

52

10,003

1,573

1,679

45

215,733

0

0

0

0

0

0

0

0

0

0

5

5

0

0

0

0

0

1

0

11

893

2,035

19,670

2

113,826

2,887

0

531

15,159

234

20,905

7,993

4,275

0

0

2,044

610

50,602

11,821

253,488

893

2,035

19,670

2

113,826

2,887

0

531

15,159

234

20,910

7,998

4,275

0

0

2,044

610

50,603

11,821

253,498

25068-38-6

100-41-4

—

—

—

—

—

108-67-8

108-88-3

—

7440-02-0

—

—

108-95-2

71-43-2

—

50-00-0

—

—

30

40

63

64

68

100

108

224

227

230

231

232

243

266

299

304

310

311

346

Ethylbenzene

Xylene

Silver and its water-soluble compounds

Chromium and chromium ( ) compounds

Cobalt and its compounds

Inorganic cyanide compounds(except complex salts and cyanates)

1, 3, 5-Trimethylbenzene

Toluene

Lead and its compounds

Nickel

Nickel compounds

Barium and its water-soluble compounds

Phenol

Benzene

Boron and its compounds

Formaldehyde

Manganese and its compounds

Molybdenum and its compounds

Volume released Volume transferred

22.830

48.8

30.9

Ⅲ

Bisphenol A type epoxy resin (liquid)

54


6,358 10,234 14,931 120 14,769 22,113 0.0 0.2 0.3 － 76

30,863 9,677 24,823 553 16,839 36,083 － 3.5 － 0.2 410

14,538 2,630 16,061 687 11,997 35,705 1.8 6.6 －－ 683

132,195 31,251 139,811 6,045 44,031 312,223 65.6 187.4 14.6 － 5849

17,391 695 20,745 269 20,952 34,282 0.7 7.2 － 5.6 641

235 885 6,631 82 367 13,321 －－－ 0.1 75

10,201 2,477 22,084 511 6,623 32,338 2.3 －－－－

1,725 2,438 4,737 30 119 5,731 0.2 1.9 －－ 1

54 829 5,395 126 742 6,972 － 1.9 － 0.5 73

321 85 3,149 11 310 5,905 0.0 5.0 6

227 676 3,923 21 1,407 5,203 －－－－ 20

108 145 4,063 27 398 4,863 －－－ 0.7 27

14,311 43 1,357 1 106 1,787 －－－－－

0 4,049 9,696 18 1,726 20,604 0.3 0.7 10.6 － 12

2,045 3,950 6,292 8 3,329 13,254 －－ 0.0 － 4

15,779 102 4,429 1,151 3,832 7,123 3.0 2.7 － 1.3 1,151

3,570 83 717 4 446 1,238 －－－－ 4

28,909 4,183 23,088 128 41,364 36,729 － 6.2 － 0.0 81

3,737 1,319 7,589 172 3,617 9,385 － 0.3 － 0.0 172

2,690 1,283 14,819 229 1,848 17,805 0.0 1.7 － 0.4 229

210 1,295 1,761 86 287 2,506 －－－ 1.0 86

4,866 384 8,149 40 1,212 12,461 － 5.8 －－ 37

2,105 574 2,939 48 209 6,147 2.7 16.1 － 1.0 39

258 159 385 37 65 511 －－－ 0.0 34

0 1,415 5,195 14 811 6,922 －－－－ 5

Arc furnace

Melting furnace

Annealing furnace

Heating furnace

Melting furnace

－

Arc furnace

Small boiler

Boiler

Arc furnace

－

－

－

Boiler

Melting furnace

Heating furnace

－

Heat-treating furnace

Vacuum melting furnace

Sintering furnace

－

Arc furnace

In-house power generator

－

－

－－ 180 22 0.1 0.001 5.8～8.6 7.7 50 2 15 3.8 －－

－－ 180 63 0.2 0.0008 5.8～8.6 6.5 50 3.1 －－ 25 0.7

2.27 0.05 180 67 0.25 0.005 5.8～8.6 7.7 25 2 25 3 －－

4.9 0.049 180 65 0.2 0.0025 5.8～8.6 8.3 150 2.7 20 5.6 －－

2.5 0.017 180 29 0.2 0.07 5.8～8.6 7.5 60 4.5 －－ 25 9.3

－－－－－－ 5.8～8.6 7.2 200 2 －－ 160 3.7

3.73 0.19 －－ 0.4 0.035 －－－－－－－－

0.44 0.015 －－－－ 6.0～8.5 7.6 －－－－－－

－－ 150 42 0.3 0.0027 5.7～8.7 7.2 300 0.1 －－ 300 3.5

－－ 180 20.4 0.15 0.01 －－－－－－－－

－－－－－－ 5.8～8.6 6.4 70 8.5 －－ 25 3.1

－－－－－－ 5.0～9.0 7.5 600 16.7 －－ 600 33.7

－－－－－－－－－－－－－－

0.63 0.013 180 65.5 0.3 0.02 5.8～8.6 7.1 30 13 20 14.5 －－

－－－－ 0.2 0.0035 5.8～8.6 6.1 150 0.5 160 3.2 －－

－－ 180 59 0.20 0.01 5.8～8.6 6.4 90 ND －－ 25 0.2

－－－－－－ 5.8～8.6 7.6 100 3 100 4 －－

－－ 200 25 0.25 0.002 5.0～9.0 7 600 24 －－ 600 25

－－－－ 0.1 0.0023 5.7～8.7 7.3 300 ND －－ 300 4.5

2.27 ND 180 ND 0.25 0.034 5.8～8.6 7.4 60 1 －－ 25 3.1

－－－－－－ 5.0～9.0 7.2 300 23 －－ 600 23

9.68 0.054 220 100 0.15 ND 6.4～7.7 7.1 25 2 －－ 20 3.6

1.88 0.01 950 660 0.1 0.041 5.8～8.6 7.7 120 1 －－ 60 1.2

－－－－－－ 5.8～8.6 7.5 90 1 －－ 60 1

－－－－－－－－－－－－－－

Kyushu Works*1

Moka Works*1

Kuwana Works

Yasugi Works

Kumagaya Works (Automotive Components Company)*1

Tottori Works

Kumagaya Works (NEOMAX Company)

Wakayama Works

Yamazaki Manufacturing Center

Ceramics Division

Hitachi Tool Engineering, Ltd. / Narita Plant

Hitachi Tool Engineering, Ltd. / Yasu Plant

Hitachi Metals Techno, Ltd.

HMY, Ltd.

Hitachi Metals Precision, Ltd.

Seitan Inc.

Hitachi Valve, Ltd.

HMW, Ltd.

NEOMAX MATERIALS Co., Ltd.

NEOMAX KINKI Co., Ltd.

NEOMAX KAGOSHIMA Co., Ltd.

NEOMAX KYUSHU Co., Ltd.

Toyo Seihaku Co., Ltd. / AKITA Plant

Toyo Seihaku Co., Ltd. / NIIGATA Plant

Hitachi Metal Tool Steel, Ltd.

Kyushu Works

Moka Works

Kuwana Works*4

Yasugi Works

Kumagaya Works (Automotive Components Company)

Tottori Works

Kumagaya Works (NEOMAX Company)

Wakayama Works*4

Yamazaki Manufacturing Center

Ceramics Division

Hitachi Tool Engineering, Ltd. / Narita Plant*4

Hitachi Tool Engineering, Ltd. / Yasu Plant

Hitachi Metals Techno, Ltd.

HMY, Ltd.

Hitachi Metals Precision, Ltd.

Seitan Inc.

Hitachi Valve, Ltd.*4

HMW, Ltd.

NEOMAX MATERIALS Co., Ltd.

NEOMAX KINKI Co., Ltd.

NEOMAX KAGOSHIMA Co., Ltd.

NEOMAX KYUSHU Co., Ltd.*4

Toyo Seihaku Co., Ltd. / AKITA Plant

Toyo Seihaku Co., Ltd. / NIIGATA Plant

Hitachi Metal Tool Steel, Ltd.

*5 *5

*5

*5

*5

*1: Including data from Group companies on the Works’ property

*2:Atmospheric emission concentrations measured based upon the Air Pollution Control Law.

*3 :Representative facilities in sites regulated by the Air Pollution Control Law.

*4 :Wastewater is not subject to regulation. The figures given are voluntary standards.

*5ND : not detected

INPUT OUTPUT

Classification

Exhaust gas quality*3 Wastewater quality

ClassificationType of Facility

Regulation Levels Results

SOx (Nm3/h) NOx (ppm) Dust (g/Nm3) pＨ Suspended Solids (mg/ℓ) Chemical Oxygen Demand (mg/ℓ) Biochemical Oxygen Demand (mg/ℓ)

Regulation Levels Results Regulation Levels Results Regulation Levels Results Regulation Levels Results Regulation Levels Results Regulation Levels Results

Primary Materials

(t/year)

Subsidiary Materials

(t/year)

Energy Usage(Crude oil

equivalent, kℓ/year)

Water Use

(Thousand m3/year)

Waste

(t/year)

CO2 SOx *2 NOx *2 COD *2 BOD *2

(t/year)

Wastewater

(Thousand m3/year)(t/year) (t/year) (t/year) (t/year)

Site Data

Materials flow in major manufacturing sites in the Hitachi Metals Group in fiscal 2009

Environmental analysis data at major manufacturing sites in the Hitachi Metals Group in fiscal 2009

ProfessorFaculty of Humanity and Environment, Hosei University Kozo Horiuchi

Hitachi Metals’ Answer Senior Vice President,Representative Executive Officer and DirectorHitachi Metals, Ltd. Kimio Hanamura

55

relationships with clients, suppliers and local communities, foreign

cultures and histories, risk managements, etc., and this report shows

that each respective division staff are innovating and responding to

stakeholders in various ways.

When it comes to environmental targets and results, we must consider

the positive and negative environmental aspects separately. Businesses

that have positive environmental aspects are those that produce an

win-win outcome, achieving both economic gains and environmental

improvement. For Hitachi Metals Group, development and sales of

eco-products fit this category. In fiscal 2009 the proportion of sales

generated from eco-products rose to 73%. In contrast, negative

environmental aspects are those that result in a negative influence on

the environment, such as CO2 emissions, soil and water pollution,

waste, etc. Compared to 1990, the Group has successfully decreased

these sorts of hazard risks to some extent, but further efforts are still

required for them to minimize these risks. Such efforts are linked to

resource and energy conservation, and eventually result in a decreased

burden on forests and waterways, helping to conserve biological

diversity. Meanwhile, their initiatives in the realm of compliance, which

became a problem with the violation of the Antimonopoly Act, are being

steadily implemented.

Most environmental targets have been achieved, but the issue of

workplace safety (fatal accident of employee) requires consideration.

There is also a need to pay more attention to legal compliance in

overseas offices. These issues have been recorded in this report, and I

think the future challenge for Hitachi Metals Group will be to advance

their initiatives on CSR at the entire group level including overseas

offices.

July 15, 2010

The key factors critical to promoting CSR are a corporate vision and

commitment of managers. The book “Built to Last: Successful Habits of Visionary Companies” by J. Collins and J. Porras states that it is

important for companies to "stimulate progress by upholding their

fundamental philosophy." In this CSR report, Mr. Hiroyuki Fujii, the

new President and CEO, stated in his message the corporate

philosophy of Hitachi Metals Group: that is, contributing to society by

creating "the best possible company." The Code of Conduct for Hitachi

Metals Group Companies has been established based on this

philosophy, and a strategy to stimulate progress, cal led the

Medium-Term Management Plan, has been formulated. One target set

forth in the Medium-Term Management Plan is to increase the

proportion of sales generated by new products, composed mainly of

eco-products, to 30% in fiscal 2012.

What is essentially required for companies is to establish a mechanism

which promotes progress based on an unalterable philosophy,

regardless of any changes in the external environment. Hitachi Metals

Group has realized its growth by diversifying its businesses through

developing diverse products based on new innovative technologies.

This stance is reflected in the fact that R&D expenditure has not fallen

as much as profit, despite a fall in income and profit due to the

recession of the last two years.

The thing that stands out in their CSR report is innovative ideas. Since

fiscal 2009 Hitachi Metals has improved its stakeholder reporting by

publishing digest versions summarizing issues for the general public,

and posting detailed information on its website for stakeholders who

seek specialized information. In fiscal 2010 they have been holding

round-table discussions for young and mid-career staff, and collecting

grassroots ideas on CSR from the work sites themselves. CSR covers

many areas including compliance, fostering human resources,

Based on our corporate philosophy of "contributing to society by creat-

ing the best possible company," our management has been respon-

sive to changes in the external environment. For example, we concen-

trate management resources on developing eco-products in response

to customer needs. In terms of manufacturing process, we promote

eco-craftsmanship (monozukuri) through process innovations. We at

Hitachi Metals Group will further strive to respond to the expectations

of society by continuing CSR activities with our corporate philosophy

and the Code of Conduct based on it as guideposts.

The issue of workplace safety that you raised is indeed deeply regret-

table. At present we are taking steps across the Group to avoid such

an incident ever occurring again. This is based on our policy of "safety

comes first." In the context of the ongoing progress of globalization,

we have been proactively working for legal compliance with a global

perspective, in line with our Code of Conduct, which states that "we

will comply with all relevant international conventions and the laws of

each country." Taking this further, moving forward we will act with

strong ethical views.


56


Corporate Data

Hitachi Metals Group Major Manufacturing Facilities (As of the end of March 2010)

Corporate Profile

Establishment:

Capital:

Chief Executive Officer:

Number of Employees:

Yasugi Works2107-2 Yasugi-cho, Yasugi-shi, Shimane 692-8601, Japan

High-Grade Metal Products and Materials

HMW, Ltd.1-9-1 Kitahama, Wakamatsu-ku,Kitakyushu-shi, Fukuoka 808-8558, Japan

Tottori Works70-2 Nan-ei-cho, Tottori-shi, Tottori689-1121, Japan

Kumagaya Works(NEOMAX Company)

5200 Mikajiri, Kumagaya-shi, Saitama360-8577, Japan

Yamazaki Manufacturing Center2-15-17 Egawa, Shimamoto-cho,Mishima-gun, Osaka 618-0013, Japan

Kyushu Works35 Nagahama-cho, Kanda-machi,Miyako-gun, Fukuoka 800-0393, Japan

Moka Works13 Kinugaoka, Moka-shi, Tochigi 321-4367,Japan

Kumagaya Works(Automotive Components Company)

5200 Mikajiri, Kumagaya-shi, Saitama360-8577, Japan

Kuwana Works2 Daifuku, Kuwana-shi, Mie 511-8511,Japan

Products and Businesses:

Group Companies:

Headquarters:

High-Grade Functional Components and Equipment

Electronics and IT Devices

April 10, 1956

￥26.3 billion (As of the end of March 2010)

Hiroyuki FujiiPresident, Chief Executive Officer and Director

Hitachi Metals Group: 17,806 (As of the end of March 2010)

Manufacture, sales, and service of high-grade metal products and materials; electronics and IT devices; high-grade functional components and equipment; and services and other activities

65 subsidiaries, 10 affiliates

SEAVANS North Building, 2-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8614, JapanTel: +81-3-5765-4000 Fax: +81-3-5765-8311

Consolidated Financial Highlights ( Years ended March 31, 2010)

Net sales Operating income Net income Capital expenditures Research and development

Return on equity

13.1

11.7

10.0

590,678646,311

701,075

200820072006

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

02009 2010

Millions of yen

47,502

54,72259,698

200820072006

70,000

60,000

50,000

40,000

30,000

20,000

10,000

02009 2010

17,165

22,062

27,034

200820072006

30,000

25,000

20,000

15,000

10,000

5,000

0

-5,0002009 2010

29,640

36,787

49,327

200820072006

60,000

50,000

40,000

30,000

20,000

10,000

02009 2010

12,05412,965

13,283

590,704

15,058

43,768

13,083

200820072006

14,000

12,000

10,000

8,000

6,000

4,000

2,000

02009 2010 200820072006

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0

-2.02009 2010

%

431,683

13,349 1,937

16,485

1.0

Millions of yen Millions of yen Millions of yen Millions of yen

10,626

SEAVANS North Building, 2-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8614, JapanTel: +81-3-5765-4591 Fax: +81-3-5765-4597

http://www.hitachi-metals.co.jp/

Messages concerning Hitachi Metals’ corporate social responsibility efforts can be directed to:

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