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Honjo: chemical firm seeks global partners to support international expansion

Interview - June 6, 2023

With technological prowess in functional lithium compounds and zinc products, Honjo Chemical Corporation is set to expand internationally.

NAHOKO HONJO, PRESIDENT OF THE HONJO CHEMICAL CORPORATION
NAHOKO HONJO | PRESIDENT OF THE HONJO CHEMICAL CORPORATION

Why do you believe Japan’s chemical industry has been so successful despite stiff regional competition? What are the key contributions Japan makes to the global chemical sector?

The chemical industry in Japan plays a key role in every single industry via provision of a variety of functional materials, thereby supporting the entire industrial world. These materials contribute to improving people’s lives in diverse fields, such as environmental protection, water purification, utilization of renewable energy, energy saving, resource conservation, development of the information society, progress of medical care, stable supply of food and recycling of wastes. They assist “sustainable development geared to achieving the SDGs”, which are being increasingly tackled by numerous corporations all over the world. Such contribution by Japan’s chemical industry to industry in general is a merit that cannot be seen in other industries and shows the limitless possibilities of chemicals.

It is true that basic chemistry manufacturers in Japan do not have much competitive advantage in terms of price over competitors in North America, the Middle East and China, which have rich natural resources, and countries such as ASEAN and China, where there is high demand.

Meanwhile, midstream functional chemical products are produced from basic chemicals via a number of processes, including synthesis reaction, combination and coating.

Japan’s chemical manufacturers produce millions of functional chemicals, which express functions that cannot be achieved by basic chemicals, and supply them to customers as high value-added products. Most manufacturers that produce functional chemicals specialize in a specific field and produce high value-added intermediate materials that uniquely set them apart from competitors. Another characteristic of functional chemical manufacturers is their high profitability.

Japan’s manufacturing industry, including chemical manufacturers, has won the trust of customers by building systems for quickly responding to all kinds of specifications by combining on-site capabilities, such as “ability to cope with needs,” “trial/small lot production” and “quick production”. It is their strong point.

Because production of functional chemicals requires various expertise, it is a field where Japan’s chemical manufacturers can manifest superiority in overseas markets based on their technological prowess.

Regarding the chemical industry, there are two sectors, basic chemical and functional chemical. We are dealing with both, but are mainly focused on the functional chemicals. You mentioned that we lack natural resources in Japan, so in this context, Japanese companies have tried to add value to their products with their technologies. They try to do so in niche fields, especially in response to customers' needs.

 

What do you believe to be your core strengths, or core technologies, that have allowed you so much sustained success over the years?

Simply put, it's a matter of technology and original skill. Another important thing is conversing with customers. We place much importance on dialogue with customers, so that we will understand their needs and requests. On our home page, you can find the phrase, "we are side by side with the customers”. That means we are trying to respond to their needs, which is something we have continued to do for a long time.

 

In our interview with Asaka Riken’s Yukita-san, he discussed new vectors of growth/new key applications for lithium going forward. While already widespread in consumer electronics, and more recently in powering batteries for EV, he discussed the future role lithium could play in exciting new applications, such as fuel for nuclear fusion. What are the key applications you are targeting going forward? What new applications do you believe lithium tech will serve in the future?

Around 2010, the major purposes of lithium were ceramics and glass. Today, lithium is mostly used for producing lithium-ion batteries used in electric vehicles and mobile devices. In the future, one possible use of lithium is its use in air batteries and it could also be used for nuclear fusion as well.

We also specialized in lithium nitrite solution and lithium silicate, etc., - which are used for anti-neutralizing agents and also for concrete. We were founded as a maker of zinc, then we developed technology to produce lithium, and now we continue to evolve our technology to the next stage. With our technology, we would like to continue to develop new products beyond lithium.



We talked about the lithium bromide water solution, in which you have a strong domestic market share, and lithium nitrite solution, the lithium silicate, used for concrete stabilization. You have a number of core technologies and products that serve vital roles and applications in society. We would like to know more about this product line-up that you have. Please introduce us to what you believe to be your core products.

We specialized in lithium compounds. We have been making these products for a while, but over time, the needs of the applications have changed, and we have been trying to cater to these changing needs, side by side with our customers.  The other specialty is zinc dust. This is mostly used as an anti-rusting agent for painting, and we can produce nano zinc, which is less than 10 microns in size. We are trying to utilize this in niche fields as well.

Also, we have many competitors in the zinc oxide field, so we are also trying to find a niche field that we can enter. We also have a division for organics, which is covered by an NDA, so we cannot disclose everything, but we are focusing on metallic lithium and organic lithium, which are used as materials for semiconductors, and some parts for batteries for EVs. We cannot say where it is exactly, but that's something we are working on together with our clients, and we are seeing increasing demand in this field as well.

 

You mentioned some interesting applications and customer bases. Industrial machinery, for example, automotive with EVs, and even semiconductor manufacturing equipment. Going forward, is there a type of customer or client you're focusing on, or prioritizing, in terms of your development?

Going forward, we have a vision that EVs will expand, so we would like to catch up with these increasing demands with our technology. We can say the same thing about semiconductors. However, for the area where we have NDAs, we are pursuing some niche fields for semiconductors and trying to supply the materials for this niche field.

To make the chemical compounds, we need certain equipment and technologies. For the organic compound, we have an environment of minus 80 degrees Celsius, a relatively low temperature in the chemical industry, to respond to the needs of the chemical compounds. We achieved that in the early 1990s, which is relatively earlier than our competitors in this industry. Thanks to that environment, we can produce a compound that only we can make.

In the future, in the organic division, we can produce diverse products tailored to many different industries, such as medical material and fine chemicals, since we have a particular set of equipment for that purpose. For these developments, we always work side by side with the customers to make the development happen, and bring that to the mass production stage. That's something we are also focusing on.

 

You mentioned you work very closely with customers. I'd like to know how collaboration generally plays in your business model. You mentioned close ties with your customers. How does that extend to other chemical material manufacturers, especially regarding the international market and sourcing those materials? We know that since 2020, you've been in Indonesia developing a network for sourcing zinc and zinc dust. What role does collaboration, specifically international collaboration, play in your business model?

In 2020, we started to import zinc dust and zinc oxide from our partner firm in Indonesia, “PT Indo Lysaght” and sell them to our customers after processing them into products that meet our customers’ needs. We are searching for new and future avenues of business development in cooperation with “PT Indo Lysaght.”

So far, we have been doing business mainly in the domestic market, but we also have the overseas market on our radar going forward. We have a subsidiary called Kyokuto Metal Singapore, in Singapore, and we want to utilize this presence as a hub to expand into Southeast Asia, India and Africa.

Since it is in Singapore, we would like to do more research in the local market and analyze mid- and long-term trends for different markets. We would also like to continue gathering such information in Singapore. Based on that information, we would like to select the most promising country and find a potential partner we can work with to enter that specific country or market. Based on that, we would like to expand our lithium and zinc businesses, etc., to other parts of the world.

Presently, we are looking for new partner firms especially in overseas markets. We are actively promoting business development overseas.

We are paying a lot of attention to Southeast Asia and are in the process of exploring India and Africa. We have yet to set a specific target country or market but are still trying to find promising countries or markets. Regarding zinc, we started entrusting production to a company in Indonesia to work on basic product production. We then import that to Japan for processing, which will require more advanced technologies.

We are now working with the Indonesian company for production, and we also have a subsidiary in Singapore. We will explore what we can do in Southeast Asia, India, Africa, etc., while utilizing these existing production partners and subsidiaries from now.

Besides, as the first step, we are planning overseas business development focusing especially on “lithium compound” and “zinc” among our products.

 

Imagine we come back on your very last day, when you're about to retire and leave this company to the next generation, and we interview you all over again. What dreams and goals would you like to have achieved for this company by then that you would like to tell us about in that new interview?

First of all, I would like to help young talent grow further, especially those in their 20s and 30s. With regard to R&D, we are putting the seeds down for new developments right now, and I hope to see them bloom in 20 years from now. Maybe some of them may not respond to the needs at that time, but others may remain as the pillar of this business and the company in the future. I would like to see all of them supporting the growth of this company.

The same thing can be said for lithium. Our prior generations planted those seeds 60 years ago, and now, those seeds are now supporting our company. We would like to do the same thing through our current R&D. We would like to accumulate technologies so that they will once again bloom in 20 to 30 years’ time and support the company then. That's my dream.

Of course, those seeds will have to be something that will support the company itself, but beyond that, I would also like to see those seeds support Japan as a whole, the world and the earth, so that we can contribute to a sustainable society and sustainable world.

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