HONG KONG, NNA - Japan's Daiichi Kigenso Kagaku Kogyo Co., the world's leading zirconium compound producer, has signed an agreement with a Hong Kong firm to buy mineral resources from Vietnam in a bid to diversify its procurement and processing operations from Australia and China, senior company officials say.
The Osaka-based firm will buy four types of metals -- zircon sand, zircon flour, natural rutile and ilmenite -- for more than $76 million through 2019 from a Vietnamese factory through China's Kaisun Energy Group Ltd., which deals with minerals and coals in China and central Asia.
Daiichi Kigenso produces compounds made from metals to be used mainly as a purifying catalyst for exhaust gases and counts various car and electronics makers as among main clients. Kaisun says in a statement released earlier this year that Daiichi Kigenso commands a share of more than 50 percent in the global zirconium compound market as Japan leads the world in the field of hybrid vehicles.
Senior Vice President Kimio Ouchi told NNA in an email interview, "This is a proper decision and we will develop big mineral business in Vietnam." Under the agreement, Kaisun procures the four minerals with satisfactory quality and specifications from the factory in Vietnam as requested by the Japanese firm.
The purchasing deal is part of the Japanese company's efforts to expand main material sources and processing for its products because it largely relies on China at present.
Daiichi Kigenso has fully relied on Australia and South Africa for the procurement of zircon sand and on China for its processing. The new pact allows it to source and process 10 percent of the total zircon sand for its own use from Vietnam with the possibility of raising the percentage to 50 percent in the near future.
Kaisun, the holding company listed on the Growth Enterprise Market of the Hong Kong Stock Exchange, is exploring business opportunities in emerging markets, along with China's "One Belt, One Road" initiative. It has invested over $100 million in businesses related to the initiative and is now targeting Uzbekistan and Afghanistan.
Kaisun Chairman Joseph Chan told NNA in a recent interview that his firm is seeking further cooperation with Japanese companies, saying, "We don't mind taking risks first and Japanese follow us." (NNA/Kyodo)