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Kobe Steel and Anshan Steel to start study on joint venture to make automotive steel sheet in China

September 27, 2011

TOKYO, September 27, 2011 - Kobe Steel, Ltd. announces that it had signed a nonbinding letter of intent with China's Anshan Iron and Steel Group Corporation to begin a joint study to explore the possibility of establishing a joint venture in China to make cold-rolled advanced high strength steel sheet used in automobiles.

From now, the two companies will hold discussions on the manufacturing equipment, production capacity, location, the role of each company in the project, and other aspects.

Kobe Steel plans to consider the use of a continuous annealing line to make cold-rolled advanced high strength steel sheet. Cold-rolled high strength steel generally has a tensile strength of 340 MPa or more. Advanced high strength steel, noted for its outstanding formability, has a tensile strength of 590 MPa or higher. A continuous annealing line is primarily used to make advanced high strength steel sheet.

China became the world's largest automobile market in 2009. In 2010, automobile production exceeded 18 million units. Many car manufacturers are planning to increase production capacity. By 2015, car production capacity is anticipated to rise to 30 million units, according to China's National Development and Reform Commission. To meet growing demand for high-end steel from China's car industry, Kobe Steel decided to consider setting up a production base in that country to supply automotive cold-rolled steel sheet.

Kobe Steel in April 2010 launched its medium- to long-term business vision, KOBELCO VISION "G," Under this plan, the company is bolstering its high-end "Only One" products, technologies and services. It is also further expanding business into growth regions. Kobe Steel intends to increase overseas sales from 35.8% of total sales in fiscal 2010, ended March 2011, to 50% in the next five to ten years.

In December 2010, Kobe Steel and United States Steel Corporation announced that their joint venture, PRO-TEC Coating Company, would construct a continuous annealing line to produce cold-rolled advanced high strength steel sheet for automobiles. Currently under construction, the new line will go into operation in 2013. In 2008, Kobe Steel formed a technical alliance with Austria's voestalpine Krems and an umbrella agreement with India's Essar Steel Limited. These alliances are enabling Kobe Steel to develop its business for automotive high strength steel in Japan, the United States, Europe and Asia.

Kobe Steel is operating three production bases in China to process specialty steel wire rod. If a joint venture with Anshan Iron and Steel materializes, it will be Kobe Steel's first production base for steel sheet in China. The joint venture will enable Kobe Steel to supply its high strength steel sheet locally to meet the growing demand for lighter vehicles in China.

About Kobe Steel

Kobe Steel is a leading Japanese manufacturer with businesses covering iron and steel, welding, aluminum and copper, machinery, natural resources and engineering, environmental solutions, construction equipment, and other businesses. In fiscal 2010, ended March 2011, Kobe Steel had consolidated sales of 1.86 trillion yen (US$22.35 billion) and employees of 34,772. Kobe Steel was founded in 1905 in Kobe. The president and CEO is Hiroshi Sato. More information is available at: www.kobelco.com

About Anshan Iron and Steel

Anshan Iron and Steel was established in 1948 in Anshan, Liaoning province, China. The company employs 134,000 people. Its business covers mining, steel, machinery, construction, transportation and engineering. The president is Zhang Xiaogang. More information is available at: http://en.ansteelgroup.com/