The following is the text of the Keynote Speech by Mr. Masami Iijima, President & CEO of Mitsui & Co., at the 2014 U.S.-Japan Council Annual Conference on October 10, 2014.
Good morning, ladies and gentlemen. My name is Masami Iijima and I am the President & CEO of Mitsui & Co. I am very grateful to Irene Hirano Inouye, President of USJC, for this opportunity to speak in front of so many distinguished guests and friends in beautiful Hawaii.
Today, I would like to talk about Mitsui & Co.’s activities, and the partnership between the United States and Japan.
I will start by saying a little about myself. When I was young, I was a big fan of the Major League. It was also my dream to live in the United States, but before I joined Mitsui I had never been overseas.
At Mitsui, I lived in South Africa as a trainee, and was also stationed in London for 6 years in charge of the mineral resources business. Now as CEO I travel all the time, although Hawaii is a rare business destination for me. That’s why I appreciate Irene’s choice of Hawaii for this year’s meeting. My family has been to Hawaii on vacation many times, so my wife is delighted to be here.
Actually, I learned early in my career that Hawaii is a very popular destination for people in Mitsui, because at one stage we were looking at buying a Hawaiian based steel business. Although we never did the deal, my seniors were backing the project all the way, and I’m sure part of the reason was they really wanted to come here on a business trip.
In July, Mitsui hosted a reception in New York, and it was great to see Irene there. One of the speakers was Rudy Giuliani, the former Mayor of New York City, and he thanked Japan for sending the New York Yankees two great Japanese players, Tanaka and Ichiro. But then he said he needed two more pitchers and one more hitter, so I immediately raised my hand and said, “How about me?” He politely declined, saying that he wanted a bit more size.
It was an enjoyable moment for me, and having so many customers and partners gathering in New York from all over the United States was a sign of the strong collaboration that exists between U.S. and Japanese businesses.
2. About Mitsui & Co.
Turning now to my company, I am sure many of you have heard the name “Mitsui”, or read about Japanese trading companies in general, but many people outside of Japan don’t know what we actually do.
During that trip to the U.S. back in July, a number of investors asked me to describe the core nature of Mitsui. And when I was interviewed later by the Financial Times in London, the last question they asked me was “What is Mitsui?” The interviewer was surprised when I said, “Actually, I don’t have an easy answer to that question.”
As the CEO of Mitsui, of course I know what we do, but it’s still a challenge to explain it simply. If I were to try to use a single sentence, I would say something like, “We deliver products or services needed by the entire world, through trading, export and import, financing, marketing and logistics, as well as by making investments, and establishing and developing new businesses.” But perhaps it’s best to use actual examples.
Currently, our iron ore assets have an annual delivery tonnage of more than 50 million tons, the fourth largest in the world. We own salt fields with an annual production of 3.4 million tons. We have equity in oil and gas fields among 11 countries with a daily production of 240 thousand barrels, and we produce 4.8 million tons per year of LNG in eight countries around the world. We generate 8.5 gigawatts of power from our affiliated power producers, and we have equity in more than 6000 hospital beds in 10 countries. Every year, we trade over 15 million tons of grain and foodstuff around the world.
So as you can see, we do a lot of different things.
3. Energy Business
Countries with and without resources
Our work in the energy business may help you understand Mitsui better, so let me describe how we got started.
At one time, Japan produced its own energy using coal, and even exported coal to its neighbors in Asia. After Commodore Perry’s Black Ships in 1853 and after the Meiji Revolution, the previous Mitsui & Co. was established in 1876, with a vision to develop trade between Japan and the world. Back in 1876, Mitsui & Co. held an exclusive agreement with a government coal mine, and sold coal both domestically and internationally. Later, increased energy consumption led to Japan becoming an energy-importing country. From the 1950s to the 1960s, U.S. coal comprised over half of Japan’s imports, with Mitsui & Co. being the largest importer of this resource. I should point out that the previous Mitsui & Co was dismantled after World War 2, so the current Mitsui & Co. is actually a different legal entity.
An interesting feature of the energy business is that the flow of resource imports and exports does sometimes reverse over a long period of time. But who would have believed this would happen here in the United States? Only a short while ago there were plans to import large quantities of LNG to the U.S. from Qatar or elsewhere, building new import terminals to handle the trade. Now, the situation has reversed and everyone knows the U.S. is in a position to export gas from the Shale Revolution.
I am sure that many people have no idea where this surplus LNG from Qatar is going. The answer is, Japan. Due to the Fukushima nuclear power accident in the wake of the 2011 Tōhoku earthquake and Tsunami, over 50 nuclear reactors were shut down. As a result, Japan has increased annual LNG imports by nearly 20% to cover the power shortfall. Thanks to the Shale Revolution, Japan has been able to secure vital gas resources at a critical time for the nation.
The benefits of the Shale Revolution
From small beginnings in Japanese coal nearly two centuries ago, Mitsui has become a major player in the energy business. In the U.S., we are part of the Cameron LNG project based in Louisiana, which is scheduled to start production from 2018. This is an example of the trade reversal I mentioned earlier, because this project will convert an import terminal into an export terminal. The gas from Cameron will be exported to Asia, including Japan, via the Panama Canal, which is being enlarged and will be able to handle large LNG vessels.
Mitsui is also part of LNG export projects in Abu Dhabi, Australia, Oman, Qatar, Sakhalin, Indonesia, Equatorial Guinea, and Mozambique. For Japan and any other energy importing country, diversity is key to energy security, so adding a large new source of shale gas from the U.S. is very significant for both nations.
Hawaii also stands to benefit from the Shale Revolution, with plans to introduce natural gas for power generation. There are challenges to overcome in the transportation of natural gas to this island, but various options are being considered and the concept seems to have strong potential.
The Shale Revolution and Business Opportunities
If we look at the key drivers of the Shale Revolution, we can learn even more about Mitsui as a business. The Shale Revolution was driven by the introduction of disruptive technology, which suddenly made shale oil and gas price competitive compared to conventional sources.
At an early stage of the shale revolution, Mitsui was able to acquire competitive shale interests in the US, namely, in the Marcellus Shale in Pennsylvania and the Eagle Ford Shale in Texas.
Based on our competitive upstream interests, we are also developing and connecting a range of downstream businesses, contributing to the worldwide distribution of competitive commodities. Let me give you some examples.
In collaboration with one of the largest pipeline operators in the U.S. and the Mexican state-owned petroleum company Pemex, we are building and administering a 100km gas pipeline from Arizona to Sasabe on the Mexican border.
We also participated in the Astoria Power Project, which uses shale gas to provide power to Manhattan.
Even further down the value chain, in Texas, we are constructing a world-class methanol plant to be fueled by shale gas, as a 50-50 joint venture with Celanese Corporation.
As I said before, the shale revolution is a result of disruptive technological innovation. The industrial landscape has changed dramatically as a result, and we are able to use Mitsui’s deep understanding of the industrial value chain to develop projects and create value from innovation.
There are benefits for all of us in the Shale Revolution. We want to contribute to the development of new businesses arising in the U.S., and help provide a stable energy source for Asia and Japan. The USJC has long served as the foundation of the U.S.-Japan partner relationship, and I hope that by enlarging our business base here I can further strengthen our partnership with the country I dreamed of living in when I was younger.
4. The TOMODACHI Initiative
Let me move on to another topic related to the important friendship between the U.S. and Japan.
A year and a half after the 2011 Tohoku earthquake and tsunami, I had the opportunity to meet John Roos, then the U.S. Ambassador to Japan, who invited me to join a public-private partnership called the TOMODACHI Initiative. I am happy to see him here today.
Mr. Roos recognized the importance of Japan-US relations, and I was deeply impressed by his determination to provide international exchange opportunities for the next generation of people who will eventually lead the future of our countries.
I thought it was a wonderful proposition, and the TOMODACHI-Mitsui & Co Leadership Program aimed at young American and Japanese professionals was launched.
The TOMODACHI program is based on the same concept of member exchange that we have used for many years in a business education program we developed jointly with Harvard Business School. In the Harvard program we send our own managers to join managers from our business partners in the U.S., creating a rich educational experience for all of them.
In a similar way, TOMODACHI enables twenty outstanding young American and Japanese professionals from the business and government sectors to participate in a one-week training exchange program. They meet with established and up-and-coming leaders from business and government, and contribute to a professional network that can deepen Japan-U.S. relations in the long term.
This program has been running for three years now. Each year, participants are chosen from a different city or prefecture, and the Japanese delegation always includes one person involved in the reconstruction areas affected by the 2011 earthquake.
For the first program, the American delegation travelled to Tokyo and Hiroshima, and the Japanese delegation travelled to Washington, D.C. In 2014, the American delegation travelled to Fukuoka and Tokyo.
The TOMODACHI Initiative already has connections to Hawaii, because a member of the Japanese delegation last year is now conducting research in Hawaii.
I should also mention that I was lucky enough to speak with some previous participants at the opening reception held at the Royal Hawaiian Hotel. Talking to them, it was very clear to me that these people are making a real contribution to strengthening ties between the U.S. and Japan.
Moving forward, I want Mitsui & Co. to continue to support the development of the next generation of Japanese and U.S. citizens who will contribute to stronger U.S.-Japan ties.
That brings me to the end of my remarks. I hope I have shown how Mitsui uses the fruits of innovation to address different needs in the world, and the role the U.S. and Japan can play in this changing environment. Perhaps I have also answered that difficult question from the Financial Times.
Thank you very much.
Click here to see more photos from Mr. Iijima's speech and the Opening Plenary session of the 2014 Annual Conference.
Click here to learn more about the 2014 Annual Conference.