Major risk factors related to the JX Group recognized by JX Holdings are described below. The risks described below are based on information available to the Group as of July 7, 2010 (the filing date of annual report for SEC (UNITED STATES SECURITIES AND EXCHANGE COMMISSION)) and involve uncertainties.
This information is quoted from the filing report for SEC in accordance with U.S. GAAP, which is not necessarily translation of risk factors in accordance with Japan GAAP.

Risks Related to Our Ongoing Integration

JX Holdings may fail to realize the anticipated benefits of the joint share transfer due to the challenges of integrating the operations of Nippon Oil and Nippon Mining.

The success of the joint share transfer will depend, in part, on JX Holdings' ability to realize the anticipated growth opportunities and cost savings from combining the businesses of Nippon Oil and Nippon Mining. The joint share transfer agreement calls for an ongoing integration process, including the establishment of three core operating subsidiaries under JX Holdings, each focusing on one of the petroleum refining and marketing, oil and natural gas exploration and development and metals businesses. JX Holdings faces significant challenges, including the following:

• effectively integrating the respective organizations, business cultures, procedures and operations of Nippon Oil and Nippon Mining;
• identifying and streamlining redundant operations and assets, and combining the product and service offerings effectively and quickly;
• identifying areas and activities that present substantial potential synergies as a result of the joint share transfer, and allocating resources effectively to those and other promising areas and activities;
• smoothly transitioning relevant operations and facilities to a common information technology system; and
• developing and implementing uniform accounting policies, internal controls and procedures, disclosure controls and procedures and other governance policies and standards.

If JX Holdings is not able to successfully manage the integration process, take advantage of the anticipated synergies such as its planned reduction of petroleum refining capacity, and create an integrated business, the anticipated benefits of the joint share transfer and subsequent integration may not be realized fully or at all or may take longer to realize than expected.

Significant costs are being incurred in the course of the integration of the business operations of Nippon Oil and Nippon Mining.

JX Holdings is incurring significant costs related to the integration of the business operations of Nippon Oil and Nippon Mining. Transaction-related expenses include financial advisory, consulting, legal and accounting fees and expenses and other related charges. JX Holdings may also incur significant indirect costs while integrating and combining the businesses, including expenses associated with eliminating redundant operations and resources, and reallocating and integrating resources and operations. Moreover, JX Holdings may also incur significant opportunity costs in the form of substantial disruption to its businesses and distraction of its management and employees from day-to-day operations. JX Holdings expects to incur significant costs in integrating the branding of its petroleum refining and marketing businesses.

Uncertainties associated with JX Holdings as a new owner may damage JX Holdings' relationships with customers, suppliers and business partners of Nippon Oil and Nippon Mining.

Customers, suppliers and business partners of Nippon Oil or Nippon Mining may, in response to the steps taken to integrate the businesses of Nippon Oil and Nippon Mining, delay or defer decisions concerning their relationships with JX Holdings. Moreover, the terms of some of the business alliances to which JX Holdings has succeeded permit the business partner to terminate the alliance upon the completion of the joint share transfer, and some have opted to do so. The loss of such customers, suppliers and business partners, or the termination of business alliances may have a material adverse effect on JX Holdings' business and results of operations.

Negative media coverage of the joint share transfer, as well as statements by parties with competing interests, could have a materially adverse effect on JX Holdings' reputation, business and results of operations.

The joint share transfer of Nippon Oil and Nippon Mining is being covered extensively by both Japanese and foreign media. Some of this coverage may be negative and pertains to a wide range of matters relating to the joint share transfer. Negative media coverage about the joint share transfer, regardless of its veracity, may affect investor sentiment and could have a material adverse effect on the stock price of JX Holdings. The resulting reputational harm from such negative media coverage relating to the joint share transfer may also affect consumer perception, negatively affecting the business and results of operations of JX Holdings. JX Holdings may also be forced to devote considerable resources to address the impact of such media coverage relating to the joint share transfer.

JX Holdings is a holding company and its ability to meet its obligations depends upon the results of operations from its subsidiaries. JX Holdings' ability to pay dividends is also restricted by statutory provisions.

JX Holdings is a holding company that conducts substantially all of its operations through its subsidiaries. Accordingly, JX Holdings is dependent upon the earnings and cash flows of, and dividends and other distributions from, its subsidiaries to provide funds necessary to meet its obligations. The ability of JX Holdings' subsidiaries to pay dividends to JX Holdings may be limited by statutory provisions and contractual restrictions. As a result, although JX Holdings' subsidiaries may have cash, JX Holdings may not be able to access that cash to satisfy its obligations and pay dividends to its stockholders.
Under the Companies Act of Japan (the "Companies Act"), JX Holdings may not declare or pay dividends unless it meets specified financial criteria on an unconsolidated basis. Generally, JX Holdings is permitted to pay dividends only if it has retained earnings on its unconsolidated balance sheet as of the end of the preceding fiscal year as determined in accordance with Japanese GAAP. For details of restrictions on the payment of dividends, see "Item 10. Additional Information - Memorandum and Articles of Incorporation - Dividends."
In addition, JX Holdings' right to participate in any distribution of assets of any of its subsidiaries upon the subsidiary's liquidation or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent that any claims by JX Holdings as a creditor of such subsidiary are recognized. As a result, the shares of each subsidiary held by JX Holdings are effectively subordinated to all existing and future liabilities and obligations of that subsidiary.

A successful legal challenge to the validity of the joint share transfer following its completion may invalidate the shares of JX Holdings issued in the joint share transfer.

Until six months after the effective date of the joint share transfer, any of Nippon Oil's or Nippon Mining's shareholders, directors, corporate auditors or liquidators as of the effective date of the joint share transfer may bring a court action to nullify the joint share transfer. JX Holdings' shareholders, directors, corporate auditors or liquidators may also bring a court action to nullify the joint share transfer until six months after the effective date of the joint share transfer. A court may nullify the joint share transfer if it finds that a material procedural defect occurred in connection with the joint share transfer. If any court action challenging the validity of the joint share transfer is brought, the price or liquidity of JX Holdings' shares may be adversely affected, regardless of the merits of the claim. Moreover, if such a court action is successful and a court enters a final and binding judgment, JX Holdings would be liquidated and JX Holdings' shareholders at the time of such judgment will receive shares of Nippon Oil and/or Nippon Mining.

Risks Relating to JX Holdings' Business

JX Holdings may not achieve the targets set forth in its management plans due to changes in economic and business conditions.

The demand and prices for energy, refined petroleum products and metals are affected by general economic growth rates. The global economic and business outlook is uncertain and the occurrence of periods of low or negative economic growth in Japan, Asia or other parts of the world may make it difficult for JX Holdings to achieve the utilization rates and other targets that its management envisioned when it established its current strategy and plans. Economic conditions may cause the dollar-yen exchange rate, spot price for crude oil, price for copper and other key factors to vary from the assumptions used by JX Holdings in its management plans. Such variations could make it difficult for JX Holdings to achieve the objectives in its management plans and could adversely affect JX Holdings' financial condition and results of operations.

Prices for commodities, including prices for crude oil, natural gas and copper, may fluctuate and JX Holdings may not be adequately hedged, which may adversely affect JX Holdings' financial condition and results of operations.

Prices for commodities, including prices for crude oil, natural gas and copper, are affected by changes in supply and demand for such commodities, and can be influenced by various underlying factors including economic conditions, foreign exchange rates and other economic indicators, weather conditions, laws and regulations and actions taken by market participants and regulatory bodies. Furthermore, political developments, including war, embargoes and political strife in oil, natural gas or copper producing regions can affect world crude oil, natural gas and copper supply and prices.
Fluctuations in prices for commodities, including prices for crude oil, natural gas and copper, could have an adverse effect on JX Holdings' financial condition and results of operations. Moreover, JX Holdings' use of the average cost method for evaluating its crude oil inventory will have the effect of reducing the amount of decrease in the cost of goods sold as compared to the amount of decrease in the latest prices JX Holdings pays for crude oil. The average cost method may therefore adversely affect JX Holdings' results of operations during periods when market prices for crude oil decline below the average cost of crude oil in JX Holdings' inventory.
JX Holdings enters into contracts to hedge a portion of its exposure to fluctuations in the prices for oil, natural gas, copper and other commodities, as well as for the prices for certain products manufactured from those commodities. As part of this strategy, it may utilize fixed-price forward physical purchase and sale contracts, futures, financial swaps, and option contracts traded in over-the-counter markets or on exchanges or entered into on a negotiated basis. However, JX Holdings may not cover the entire exposure of its assets or positions to market price volatility, and the coverage will vary over time. As a result, fluctuating commodity prices may adversely affect its financial results to the extent it has unhedged positions. In addition, economic hedging activities may not qualify for hedge accounting under U.S. GAAP, resulting in increased volatility in JX Holdings' net income.

Prices for JX Holdings' products such as refined petroleum products, petrochemicals and fabricated metals may fluctuate significantly, resulting in volatile margins for its products, and JX Holdings may be unable to pass along higher production costs to customers.

The financial results of JX Holdings are largely dependent on the margins that JX Holdings earns on its products, including its refined petroleum products, petrochemicals and metals products. Historically, margins have been volatile, and they are likely to continue to be volatile in the future. Future volatility may adversely affect JX Holdings' business, since its margins may not be adequate to support profitable operations and positive operating cash flows.
Prices for JX Holdings' products are affected by changes in supply and demand for such products and can also be influenced by various underlying factors including economic conditions, weather conditions, actions taken by market participants such as changes in domestic refinery capacity and the number of service stations, laws and regulations and actions taken by regulatory bodies.
JX Holdings attempts to preserve margins by matching, to the extent possible, changes in the sales prices of its products to changes in the cost of sales. However, due to price competition and other factors, it will not always be possible for JX Holdings to preserve significant margins, or any margins at all. Moreover, even if JX Holdings can adjust the sale prices of its products to reflect changes in cost of sales, price changes may lag changes in the cost of sales. Any lag will adversely affect JX Holdings' ability to preserve margins during periods of sudden or prolonged increases in raw materials prices. Thus, margins may decline for extended periods of time when prices for raw materials are generally rising. Downward pressure on JX Holdings' margins may have a material adverse effect on its operating results and cash flows.

Because most of JX Holdings' sales are concentrated in Japan, adverse economic conditions and energy-conservation trends in Japan may negatively affect JX Holdings' financial condition and results of operations.

In the fiscal year ended March 31, 2010, 87.4% of Nippon Oil's revenues and 79.2% of Nippon Mining's revenues were generated from customers located in Japan. The concentration of sales in the Japanese market makes JX Holdings' business highly dependent on consumer demand and general economic conditions in Japan.
In recent years, Japanese consumers have been increasing their purchases of hybrid and compact cars and other fuel-efficient products, and consumer demand has been decreasing for kerosene space heaters and other items once commonly found in Japanese households that used refined petroleum products as fuel. This shift in consumer trends is reducing demand for refined petroleum products. If these trends continue or accelerate, demand for refined petroleum products could continue to decline, adversely affecting JX Holdings' financial condition and results of operations.
Moreover, despite signs of improvement in consumer spending and exports, the outlook for the Japanese economy remains extremely uncertain, owing to declines in private sector capital investment and residential real estate construction and other factors. Demand for refined petroleum products in Japan is expected to continue to decline for the foreseeable future. Any further declines in domestic economic activity would likely depress demand for petroleum products and, owing to JX Holdings' concentration of sales in the Japanese market, negatively affect JX Holdings' financial condition and results of operations.

Because sales of some products in China and other Asian countries are significant, adverse economic conditions in those regions may negatively affect JX Holdings' financial condition and results of operations.

JX Holdings relies significantly on customers in China and other Asian countries for sales of petrochemicals, refined copper, copper foil, sputtering targets and certain other products. If demand for JX Holdings' products in China and other Asian countries fails to grow as expected or such demand declines due to economic weaknesses or other adverse conditions in these countries, JX Holdings' financial condition and results of operations may be adversely affected.

The failure or poor performance of overseas strategic alliances or investments may prevent JX Holdings from realizing the benefits of its growth strategy.

JX Holdings seeks to capture overseas opportunities by entering into and enhancing alliances with overseas energy companies with a strong presence in Asia, or through overseas investments. JX Holdings plans to use alliances to market its refined petroleum products and other products outside of Japan and expand its oil and natural gas exploration and production business. If JX Holdings fails to identify or enter into effective alliances with partners with whom significant business relationships and synergies may be developed, or fails to maintain Nippon Oil's and Nippon Mining's alliances and business relationships, JX Holdings may not realize the benefits of this strategy and may not realize its planned growth overseas.

JX Holdings' financial condition and results of operations may be adversely affected by risks and uncertainties relating to the foreign jurisdictions in which it sources raw materials.

JX Holdings sources raw materials for its businesses in countries and regions worldwide. In particular, JX Holdings relies on a limited number of sources in the Middle East for most of its supplies of crude oil. In addition, JX Holdings sources a substantial portion of the copper concentrate used in its smelting and refining business through arrangements with mines in Chile. JX Holdings' business may be adversely affected by various risks in the foreign jurisdictions where it sources raw materials, including destabilization of the political climate, adverse economic conditions, natural disasters and changes in laws and their application and in governmental policies. If JX Holdings' supplies of raw materials are disrupted, it may be unable to obtain adequate substitutes because there are only a limited number of jurisdictions from which raw materials can be sourced.

JX Holdings' business may be adversely affected by existing or future environmental regulations.

In connection with its various businesses, JX Holdings is subject to extensive environmental protection laws and regulations in Japan and other jurisdictions. These laws and regulations provide for, among other things:

• restrictions on, or imposition of fees for, the discharge of waste substances or for cleanup costs, including with respect to soil contamination, wastewater, gas or solid waste materials;
• levy of fines and payment of damages for serious environmental offenses;
• closure of any facility which fails to comply with regulatory orders, or fails to correct or halt operations causing environmental damage; and
• mandatory contributions to the International Oil Pollution Compensation (the "IOPC") Funds.

In response to the ongoing oil spill in the deepwater Gulf of Mexico, the United States or other governments may impose new regulations or restrictions on deepwater oil drilling, or otherwise adverse to the oil business generally.
In addition, new environmental regulations and international initiatives, such as the Copenhagen Accord from the United Nations, directed at reducing carbon dioxide may mandate the blending of biomass, which would necessitate additional capital investments in refineries or result in increases in refining and other production-related costs. Japanese or other authorities might revise current regulations or introduce new environmental regulations, and compliance with existing and any future regulations may result in significant additional expenditures. Liabilities and obligations incurred in complying with environmental regulations may have a material adverse effect on JX Holdings' results of operations and financial condition and could affect how JX Holdings operates its businesses.
Gould Electronics Inc., a Nippon Mining subsidiary in the United States, is a potential responsible party for the cleanup of certain sites under U.S. environmental laws. Gould Electronics has provided reserves that it considers appropriate, but the actual amount that Gould Electronics may have to contribute may exceed the reserves. Depending on the amount of any such shortfall, JX Holdings' results of operations and financial condition may be negatively affected.

JX Holdings faces operating risks that may cause significant business interruptions.

JX Holdings is exposed to a variety of potentially severe operating risks, including the risk of fire, explosions, embargoes, natural disasters (such as earthquakes, thunderstorms, hurricanes and volcanic eruptions), accidents, mechanical problems, labor disputes, epidemics, unexpected geological conditions, oil spills, mine collapses, environmental hazards and weather and other natural phenomena. JX Holdings' sourcing of raw materials, shipment of products and other transportation activities are subject to the hazards of marine operations, such as piracy, capsizing, collision and adverse weather and sea conditions. If any of these operating risks materializes, JX Holdings could incur substantial losses. Such losses may involve or arise from serious personal injury or loss of life, severe damage to or destruction of property such as plants, natural resources, equipment, information systems, pollution and other environmental damage, cleanup costs and liabilities, regulatory investigations and penalties, and suspension of operations. JX Holdings' operating risks also include the risk that its business partners may suffer significant business interruptions.
In accordance with industry practice, JX Holdings maintains insurance against some, but not all, of the risks described above. There can be no assurance that it will have continued access to comparable coverage at acceptable rates or that such coverage will be adequate to cover losses or liabilities that may arise.

JX Holdings' financial condition and results of operations may be adversely affected by fluctuations in foreign exchange rates.

Fluctuations in foreign exchange rates may adversely affect JX Holdings' sales of products overseas, and the Japanese yen-translated value of JX Holdings' products sold overseas. For example, a strengthening of the Japanese yen against currencies of Asian countries to which JX Holdings exports petrochemical products will adversely affect the price competitiveness of those products and may negatively affect JX Holdings' financial condition and results of operations. Moreover, fluctuations in foreign exchange rates may adversely affect the Japanese yen-translated price JX Holdings pays when it purchases crude oil used in its petroleum refining and marketing operations. In addition, foreign exchange rate fluctuations may have a material effect on the Japanese yen-translated value of the assets, liabilities, income and expenses of consolidated foreign subsidiaries and affiliates whose functional currencies are not Japanese yen. The high and low exchange rates of Japanese yen for U.S. dollars, expressed in Japanese yen per $1.00 and based on the noon buying rate in the City of New York, were ¥100.71 and ¥86.12 for the fiscal year ended March 31, 2010 and ¥110.48 and ¥87.80 for the fiscal year ended March 31, 2009.

The petroleum refining and marketing business is highly competitive and JX Holdings faces intense competition.

JX Holdings' business, especially its petroleum refining and marketing business, faces intense competition, including from domestic Japanese petroleum refining and marketing companies and subsidiaries of major international oil companies such as ExxonMobil Japan, Showa Shell Sekiyu K.K. ("Showa Shell"), Idemitsu Kosan Co. Ltd. ("Idemitsu") and Cosmo Oil Co., Ltd. The Japanese market for refined petroleum products is extremely price competitive due to the industry's excess refining capacity, marketing and an excess of service stations. If JX Holdings is not able to effectively operate its businesses, including its petroleum refining and marketing business in this competitive environment, its financial condition and results of operations could be materially and adversely affected.

Any failure by JX Holdings to protect its intellectual property rights from infringement or obsolescence risks may adversely affect its business and competitive position.

JX Holdings' businesses rely in part on proprietary refining and manufacturing technologies, proprietary rights in its products, processes and brands in its other businesses, and on its ability to obtain patents, licenses and other intellectual property rights over such technologies to prevent misuse by competitors. Any of JX Holdings' patents could be challenged, invalidated or circumvented. There can be no assurance that claims allowed on any present and future patents and other intellectual property rights will be sufficiently broad to protect JX Holdings' interest in or expected returns from the underlying technologies.

JX Holdings' businesses may be harmed by misappropriation of customers' personal information or proprietary data.

JX Holdings manages (directly or through third-party vendors) various personal information and proprietary data of its customers in connection with certain of its businesses, including its petroleum refining and marketing business. JX Holdings may be required to incur significant costs to protect against the threat of security breaches relating to this personal and proprietary data, or to address problems caused by such breaches. In addition, if personal information of JX Holdings' customers or other proprietary data is misappropriated or if any other significant security breach occurs, whether relating to the information JX Holdings manages or otherwise, JX Holdings could be subject to claims, litigation or other potential liabilities that could materially adversely affect its businesses and results of operations.

JX Holdings may not be successful in attracting and retaining sufficient skilled exploration and production engineers.

JX Holdings' success in its exploration and production of oil and natural gas operations depends partly on its effective use of advanced exploration and extraction technologies and methods. In order to implement advanced technologies in a technology-driven industry and to achieve future growth, JX Holdings must recruit and retain qualified scientists and engineers.
Demand for personnel with the range of capabilities and experience required in the oil and natural gas exploration and production business is high, and success in attracting and retaining such employees is not guaranteed. Failure to retain and attract critical personnel could result in a shortage of such people due to normal attrition. This could result in an inability to maintain an appropriate level of technological improvements or take advantage of new opportunities that may arise. A subsequent decline in competitiveness could have a negative impact on JX Holdings' operating results and financial condition.

The future performance of JX Holdings will be affected by its ability to find or acquire rights to additional oil and natural gas reserves that are economically recoverable.

JX Holdings' future production of oil and natural gas will be affected by its success in finding or acquiring, and developing, additional reserves in a manner that allows economically viable production. Internationally, government-owned oil companies control at least two-thirds of the potential resource base, with only the remainder available for exploration by private oil companies like JX Holdings. To the extent that government-owned oil companies choose to develop their oil and natural gas resources without the participation of international oil companies, or to the extent that JX Holdings is not viewed as a sufficiently attractive alliance partner, its exploration and development opportunities will be limited to a smaller potential resource base.
Because of limited access to major, new exploration and development opportunities, the bidding for such available opportunities has intensified and is characterized by high prices for successful bids and increasingly stringent conditions on exploration. In addition, a substantial increase in exploration activities by the industry as a whole has had a significant effect on the rates for, and availability of, drilling rigs and other operating resources.
Unless JX Holdings conducts successful exploration and development activities or purchases rights to proved reserves or resources to be converted into proved reserves, or both, its proved reserves will decline as its existing reserves are exhausted. If JX Holdings is unable to consistently replace its oil and natural gas reserves, production levels may decline, which could negatively affect JX Holdings' operating results and financial position.

Oil, natural gas and ore reserves data are only estimates, and JX Holdings' future production may differ materially from estimated reserves.

The estimation of oil, natural gas and ore reserves involves subjective judgments and determinations based on available geological, technical, contractual and economic information. Proved developed oil and natural gas reserves are those that can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Ore reserves are that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. None of these amounts can be determined with certainty. Substantial upward or downward revisions in reserve estimates may be required, based on new information from production, drilling, exploration, sampling or testing activities or changes in economic factors, as well as from developments such as acquisitions and dispositions, new discoveries and extensions of existing fields or deposits and the application of improved recovery techniques. Reserve estimates are also subject to correction for errors in the application of published rules and guidance. A downward revision of a reserve estimate is an indication of lower future production. If actual reserves are less than estimated, this may have a material adverse effect on JX Holdings' production, results of operations and financial condition.

The development of oil, natural gas and mineral resources is subject to substantial uncertainties, and requires significant capital investments.

JX Holdings' oil and natural gas fields and copper deposits are in various stages of development. Successful completion depends upon overcoming substantial risks, including, but not limited to, risks relating to failures of siting, financing, construction and governmental approvals. There can be no assurance that any individual project will be completed or otherwise successfully commence commercial operations, or that capitalized costs for projects under development are recoverable. For oil and natural gas properties, under the full cost method, if capitalized costs less accumulated amortization exceeds the full cost ceiling, the excess is charged to expense. For copper deposits, if a project under development is abandoned, all capitalized development costs are expensed. Unsuccessful development efforts may have a material adverse effect on JX Holdings' results of operations. For more discussion of the full cost method and mining development costs, see Notes 2 to Nippon Oil's and Nippon Mining's audited consolidated financial statements included elsewhere in this annual report.

The high cost or unavailability of drilling rigs, equipment, supplies and oil field services could adversely affect JX Holdings' ability to execute its exploration and production plans on a timely basis and within its budget.

In connection with the exploration and production of oil and natural gas, JX Holdings expects to lease the necessary exploration and production materials such as drilling rigs and other equipment and supplies from third parties, and also expects to obtain related oil field services from third parties. From time to time, and especially during periods when market prices for crude oil are high, these materials and services are in short supply. During these periods, the costs for these materials and services may increase substantially. Moreover, JX Holdings' access to such materials and services may be delayed or the materials and services may not be available on commercially acceptable terms. If JX Holdings is unable to obtain required materials and services on commercially acceptable terms and in a timely manner, JX Holdings' financial condition and results of operations could be adversely affected.

As a custom smelter, JX Holdings is exposed to various factors beyond its control that may adversely affect its margins in the copper smelting and refining business.

JX Holdings conducts operations in its metals business mainly as a "custom smelter," as it relies on third-party suppliers for the concentrate used in its smelting operations. As a custom smelter, JX Holdings acquires copper concentrate for its smelting operations from overseas suppliers and produces refined copper for sale to its customers. The margin JX Holdings earns in this business principally consists of treatment and refining charges and a sales premium above the London Metal Exchange ("LME") price of refined copper. Various factors beyond JX Holdings' control may, however, affect the treatment and refining charges or sales premiums JX Holdings is able to collect.
Treatment and refining charges are established through negotiations with copper concentrate suppliers. In recent years, the supply of copper concentrate to the market has tended to be insufficient owing to a decrease in concentrate grade, increasing demand from China and India and other factors, and the negotiating position of custom smelters such as Nippon Mining has become weaker. These factors have combined to put downward pressure on smelting margins and may lead to a material adverse effect on JX Holdings' results of operations.
JX Holdings' treatment and refining contracts are denominated in U.S. dollars. Some of these contracts include terms that adjust the smelting and refining margins to partially reflect fluctuations in international prices for copper. Therefore, JX Holdings' smelting and refining margins tend to decline when the Japanese yen appreciates in value or when international copper prices fall.
Sales premiums are established through negotiations with its customers and reflect various factors, including demand for refined copper, import tariffs and other importation costs. Depending on the outcome of customer negotiations, JX Holdings' margins could decrease, potentially leading to a material adverse effect on JX Holdings' results of operations.

International competition for copper concentrate is increasing, and failure to procure a stable supply of such concentrate could have a material adverse effect on JX Holdings' business and results of operations.

JX Holdings conducts its metal business mainly as a custom smelter, and obtains copper concentrate to be used in its smelting and refining business from third-party suppliers overseas. However, due to a number of factors, including declines in worldwide reserves of ore with high copper content, the world supply of copper concentrate has generally been strained. These factors, coupled with the effect of increasing demand for copper concentrate from large consumers in China and India, have led to intense competition for the copper concentrate available in the world market.
JX Holdings has investments in various mining complexes to source a significant portion of the copper concentrate used in its smelting and refining business. For the fiscal year ended March 31, 2010, Nippon Mining procured approximately 46% of the copper concentrate used in its smelting and refining business through such arrangements with the Escondida, Los Pelambres and Collahuasi mines in Chile.
If operations in any of the mining complexes in which JX Holdings has investments are significantly reduced, interrupted or curtailed, JX Holdings may be unable to timely procure on similar terms the raw materials it needs for its smelting and refining business, and its business and results of operations may be materially and adversely affected.

Demand for electronic materials is dependent upon technological developments, and the market for electronic materials is highly competitive.

JX Holdings sells electronic material products that are mainly used in IT-related and consumer electronics industries. Supply and demand conditions and price movements in those industries may have a material effect on the financial performance of JX Holdings' electronic materials operations.
The electronic materials business is highly competitive and subject to rapid technological innovation and changes in customer needs. If JX Holdings is unable to respond effectively to changes in technology and customer needs, then its competitive position in the electronic materials segment may decline.

JX Holdings' construction business is reliant on trends in public spending and private capital investment.

JX Holdings' construction business heavily relies on demand for contract construction, paving and civil engineering projects. As a result, any declines in public spending or private capital investment, including in residential real estate construction, could have a negative affect on JX Holdings' construction business and negatively affect the results of those operations.

The titanium business is reliant on specialized demand, and its results may be negatively affected by demand volatility.

Demand for titanium is concentrated in specific industries. Titanium metals are used primarily in the manufacture of aircraft, power plants, chemical plants and seawater desalinization plants. Titanium catalysts are used almost exclusively in propylene polymerization. Changes to conditions for the industries that are major consumers of titanium could cause a decrease in demand for JX Holdings' titanium business and negatively affect the financial results of those operations.

Risks of Owning the Shares

Japan's unit share system imposes restrictions on the rights of holders of shares of JX Holdings common stock that do not constitute a unit.

Pursuant to the Companies Act and certain related legislation, the articles of incorporation of JX Holdings provide that 100 shares of JX Holdings common stock constitute one unit. Holders of shares that constitute less than one unit do not have voting rights under the Companies Act, which imposes other significant restrictions and limitations on such holders. The transferability of such shares is also significantly limited. Under the unit share system, holders of shares constituting less than one unit have the right to require the issuer to purchase their shares. In addition, JX Holdings' articles of incorporation provide that a holder of less than a unit of JX Holdings shares may request that JX Holdings sell to such holder such amount of shares which will, when added together with the shares constituting less than one unit, constitute one unit of shares, as long as JX Holdings has treasury stock to sell upon such request.

Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions.

The articles of incorporation, share handling regulations and regulations of the board of directors, as well as the Companies Act, govern the affairs of JX Holdings. Legal principles relating to such matters as the validity of corporate actions, directors' and officers' fiduciary duties and shareholders' rights may be different from those that would apply if JX Holdings were a non-Japanese company. Shareholders' rights under Japanese law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.

It may not be possible for investors to effect service of process within the United States upon JX Holdings' directors, senior management or corporate auditors, or to enforce against JX Holdings or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.

JX Holdings is a joint stock company incorporated under the laws of Japan. Almost all of JX Holdings' directors, senior management and corporate auditors reside outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon these persons. Furthermore, many of the assets of JX Holdings and these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to enforce, against JX Holdings or these persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. JX Holdings believes that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of claims predicated solely upon the federal securities laws of the United States.

Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell JX Holdings shares at a particular price on any particular trading day, or at all.

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each listed stock, based on the previous day's closing price. Although transactions on a given Japanese stock exchange may continue at the upward or downward price limit, if the price limit is reached on a particular trading day, no transactions on such exchange may take place outside these limits. Consequently, an investor wishing to sell shares on a Japanese stock exchange at a price outside of the relevant daily limit may be unable to complete the sale through that exchange on that particular trading day.

JX Holdings will likely cease to be a reporting company under the Exchange Act as soon as practicable in accordance with applicable rules and regulations.

JX Holdings will likely decide to cease to be a reporting company under the Exchange Act as soon as practicable in accordance with the rules that permit eligible foreign private issuers to do so. If JX Holdings ceases to be a reporting company, it will no longer be subject to the reporting provisions of the Exchange Act. As a result, U.S. shareholders will have access to less information about JX Holdings and its business, operations and financial performance. If JX Holdings ceases to be a reporting company under the Exchange Act, it will cease, among other things, to be subject to the liability provisions of the Exchange Act and the provisions of the Sarbanes-Oxley Act of 2002. If JX Holdings is unable to terminate its reporting obligations as currently contemplated, it may incur additional costs in order to maintain compliance with applicable U.S. laws and regulations.

Risk Factors（PDF:212KB/17PAGES）