Timing of completion of the Independent Investigation Committee’s investigation

As announced in our press release Improper conduct in the Kobe Steel Group (Report on "Verification Status of Safety" and "Establishment of Independent Investigation Committee") dated October 26, 2017, we set up an Independent Investigation Committee (the "IIC") for the purpose of conducting an independent and objective investigation into the facts relating to the misconduct by the Aluminum & Copper Business, which we identified and made public on October 8, 2017. The IIC also is tasked with independently and objectively investigating any other similar or comparable misconduct, verifying the appropriateness and validity of the Group's self-inspections and emergency audits, probing the direct causes of the misconduct and background factors such as corporate culture, compliance, and organizational management systems, and giving recommendations on remedial measures to prevent a recurrence.

Although the IIC was aiming to complete its investigation by the end of the year, today the IIC informed Kobe Steel that it would need to continue its activities to ensure a thorough and comprehensive investigation.

In its work to verify self-inspections that had been conducted at 79 Kobe Steel Group locations (we changed the number of locations from 66 to 79 as a result of reviewing the method for identifying the number of locations in the course of the investigation), the IIC informed Kobe Steel that in light of ensuring the integrity of those inspections, some of the procedures of the inspections conducted at approximately 70% of the locations were not adequate and so a further investigation would be required.

Kobe Steel has determined that it is necessary to conduct a more thorough inspection to recover trust and Kobe Steel has been conducting additional inspections. For instance, Kobe Steel has decided to include sample products to the scope of the products to be inspected, and to cross-reference some of the items which it did not cross-reference previously. Such items even include those that are not required to be provided in mill sheets under the agreements with customers. It is expected to take until early February 2018 for such inspections to be completed, after which the IIC will review the results.

In addition, certain cases reported to the hotline at the IIC's secretariat require the IIC to conduct the investigation carefully, and it would take extra time to investigate those cases, according to the IIC.

In response to receiving these updates from the IIC, we report herein that Kobe Steel agreed with the IIC that the IIC's investigation should be completed at around the end of February 2018, and that we will continue to fully cooperate with the IIC in its investigation.

The IIC has further informed Kobe Steel that based on the findings of their investigation of the misconduct, three of the executive officers of the Aluminum & Copper Business have been identified as having been aware of part of the misconduct, and thus, the IIC will diligently continue its investigative activities to find out the motivation and background, among others.

Accordingly, we report herein that Kobe Steel today has reassigned the responsibilities of the three executive officers mentioned above. Final action to be taken against those involved in the misconduct, including the three executives, will be determined after the completion of the IIC's investigation.

We continue making every possible effort to verify the safety of products affected by our nonconforming components. To date no safety issues have been reported, but our safety verification process continues, and we continue to report our updated results regularly. Our response is guided by our commitments to safety, accountability, fundamental reform of our operations and culture, and regaining the trust of our customers and other stakeholders.