Sumitomo Metal Mining Co., Japan’s biggest nickel producer, is reaping “major” benefits as the nation’s currency continues to weaken against the U.S. dollar, in which most metals are priced, an executive said.
Every one yen decline in the Japanese currency against the dollar increases consolidated pretax profit of the company’s mining operations by 1 billion yen ($10.6 million) on an annual basis, Senior Managing Executive Officer Yukio Kawaguchi said in an interview in Tokyo.
“A weaker yen has major positive impact on our commodity unit” as copper and gold, the company’s main mining businesses, are priced in U.S. dollars, Kawaguchi said. The currency move inflates profit, which is reported in yen, and is hence “a plus” even when buying new assets, he said.
Sumitomo Metal Mining seeks to boost profit to 100 billion yen in the year ending March 31, 2022, from 65 billion yen last year, as it increases output across its three main metals, which also include nickel. The company last reported a profit of more than 100 billion yen in the year ending March 31, 2008, during which Japan’s currency averaged 114.27 to the dollar. The yen strengthened to 75.82 to the dollar on Oct. 28 before rallying to above 94 today.