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Environmental Accounting

We calculate the costs and benefits of environmental conservation with the belief that we can accurately assess

the cost effectiveness of our business activities and capital investment by ascertaining environmental impact

and comprehensively identifying the costs of environmental conservation.

(Unit: billion yen)

(Unit: billion yen)

Category Main ActivitiesFY2010 FY2011FY2012 FY2010 FY2012

Investment

FY20101

Cost

Global environmentalconservation

Resource recycling

Pollution prevention

Upstream and downstream costs

Administrative costs

R&D costs

Social activity costs

Environmental remediation costs

Water pollution prevention

Emission levies

Total

Business Area Costs

Details

FY2010 FY2011 FY2012

Total R&D Expenditure

Total Investment

Waste heat power generationsystem

Waste treatment

Recycling waste and by-productsas alternative raw materialsand fuel for cement

Implementation of environmental

management systemInnovations to the cementproduction process

Factory tours

9.623

3.825

5.311

0.487

4.588

0.540

0.237

0.253

0.099

15.340

6.329

3.209

2.716

0.404

4.739

0.252

0.359

0.041

0.090

11.810

18.292

8.304

8.582

1.406

5.837

0.323

0.425

0.018

0.106

25.001

7.712

0.901

6.584

0.227

1.497

0.125

0.116

0.002

0.134

9.586

2.420

1.241

1.051

0.128

3.520

0.093

0.135

0.004

0.002

6.174

0.946

0.413

0.231

0.302

0.729

0.026

0.104

0

0.089

1.893

14.559

0.770

16.243

0 .6 87 0.862

16.153

Taiheiyo has developed a unique evaluation method to estimate the contribution to overall environmental benefit to society by utilizing waste materials from other industries. We refer to information, including data collected for the WBCSD-CSI Cement CO Protocol, and calculate the reduction in consumption of fossil energy and natural resources associated with the use of

waste and by-products. EEBs are calculated by multiplying the reduced volumes of CO, crude oil, natural resources and waste ( VPC production vs. cement production using waste and by-products = volumetric

environmental conservation effect) by market prices for each of the four items. The prices, assumed to be kept constant at year 2000 levels, are estimated as follows: CO: 3,000/t (a hypothetical COemission tax rate); crude oil: import price; natural resources: estimated price; waste: controlled landfill cost in the Tokyo area.

A portion of the EEB, such as the waste treatment fee, is accounted for in Taiheiyos profit and loss statement.

About Taiheiyos External Economic Benefits Evaluation

(100 millions)

0

650

700

750

2010 2011 2012 (FY)

707

662

731Impact Inventory Reduction (t)

Global warming

Depletion

of energy resources

Depletion of mining resources

Shortage of landfills

CO

Crude oil

Natural resources

Waste

1,895,162

127,113

5,315,526

4,269,533

Inventory

Market Price (/t)

Economic Benefit

(100 millions)

Total

818

18,400

1,000

15,000

15

23

53

640

731

Taiheiyo Cement evaluates the External Economic Benefits

(EEBs), or socioeconomic benefits, derived from environmental

impact reduction as a result of recycling wastes accepted

from outside the company. We use the External Economic

Benefits Evaluation method and express our evaluation in

Socioeconomic Benefits Derived from the Recycled-Waste-to-Cement System

monetary terms.

As a type of deemed benefit, an EEB of 73.1 billion yen

was identified for fiscal 2012. That same year, an increase in

the use of waste and by-products led to an economic benefit

increase of 3.4% over the previous fiscal year.

Environmental Conservation Costs

External Economic Benefits (FY2012)

Increased Extraction Capacity of the Chlorine Bypass System at the Ofunato Plant

Investment: 1.1 billion yen

Many types of waste and by-products include chlorine, which adversely affects kiln operations and cement

quality when they are used as raw materials and fuels for cement. We are addressing this problem at our plants

with chlorine bypass systems that remove chlorine. The system at the Ofunato plant has recently been improved

by increasing its extraction capacity at the cost of 1.1 billion yen, which will boost our capability to reuse waste

and by-products by 150,000 tonnes per year. Assuming that previously landfilled waste and by-products will be used as raw materials and fuels for cement

production as a result, their environmental impact is expected to be reduced by 2.25 billion yen per year (assuming a landfill cost of 15,000 yen/tonne). We

also expect these systems will facilitate the use of disaster waste generated by the Great East Japan Earthquake as resources for cement production.

Ofunato plant

Calculation of environmental impact does not factor in increased energy consumption related to the use of waste and by-

products for cement production.

Expected Reduction in Our Environmental Impact: 2.25 Billion Yen per Year

Environmental Accounting for One of Our Projects

Non-consolidated

Non-consolidated

Management The EnvironmentCollaboratingwith Society

The Environment

TAIHEIYO CEMENT CSR REPORT 20130