To meet growing demand for aluminum in Asia, KAAL Australia acquired Comalco's Yennora Plant (photo) and Alcoa of Australia's Point Henry Plant.

Damp-Shape, a versatile extruded aluminum shape, is finding ever more applications in the construction and transportation industries because of its excellent vibration-damping and sound insulation properties.

Note: These figures include inter-segment sales.

Supported by rising demand for aluminum can stock for beverage cans and the increased use of aluminum in automobile radiators, demand for rolled aluminum products rose from the previous fiscal year. In contrast, demand for rolled copper products recorded a marginal year-on-year decline as demand for semiconductor-related products flagged.
Amid this environment, total sales volume of rolled aluminum products rose from the previous year, reflecting higher demand for heat exchanger materials for automotive use and brisk demand for aluminum can stock. On the other hand, despite continued firm sales volume of copper tubes for air conditioners, total sales volume of rolled copper products edged down from the previous year owing to a decline in sales of copper sheets for semiconductors.
The preceding factors, along with favorable sales by such Group companies as Kobe Precision, Inc., and Kobe Precision Technology Sdn. Bhd., which manufacture and market aluminum computer disk blanks, led to a 6.0% increase in net sales in the Aluminum and Copper Sector, to 336.5 billion yen.
We focused our R&D efforts on the development of products in promising fields and on products that can create new markets. During fiscal 1996, our R&D efforts yielded some significant results. For example, we developed a can-stock material for smaller diameter beverage containers as well as aluminum materials that have superior formability and corrosion resistance for use as automobile body panels. In addition, we developed forged aluminum products for truck and automobile components that are lightweight and easily recycled. Also during the fiscal year, we developed aluminum computer disk blanks to respond to the trend toward increased memory capacities; high-strength copper alloys with excellent conductivity for new types of leadframes and connectors; and environment friendly, high-performance air-conditioner copper tubes.
Our activities also encompass aluminum recycling efforts. For example, we are participating in a public-private sector project in Yokohama for recovering aluminum cans and are using aluminum from used beverage cans. In addition, together with Tokyo Electric Power Company, Incorporated, we are developing technology for efficiently recovering aluminum from recycled materials and for effectively using the dross produced in the process.
During the fiscal year, to meet soaring demand for copper foil used in rechargeable lithium batteries, we began to develop mass-production technology for copper foil at Sun Aluminium Industries, Ltd., a Group company.
Among new products, we developed an improved Damp-Shape material with even better sound-absorbing properties than the original. The original Damp-Shape, which received widespread acclaim for its vibration-damping and sound-absorbing properties, is used extensively in rolling stock such as the Shinkansen high-speed trains.
Regarding capital investment in fiscal 1996, we have generally completed the investments needed to respond to an expected rise in domestic demand. We concentrated our investments on maintaining and renovating existing production facilities.
Our Group companies continued to increase and strengthen production capabilities to meet rising demand, primarily in such rapidly growing areas as China and Southeast Asia. In aluminum can stock, with the aim of improving the efficiency of operations in Australia, KAAL Australia Pty. Ltd., a joint venture with Aluminum Company of America, acquired and consolidated the rolled aluminum division of Alcoa of Australia Limited. As a result, KAAL Australia has established a production base for responding to anticipated strong demand in Asia.
We manufacture and market aluminum computer disk blanks at Kobe Steel in Japan, Kobe Precision in the United States, and Kobe Precision Technology in Malaysia. Against a background of brisk demand for PCs, we are striving to increase our production capacities at these manufacturing bases and endeavoring to strengthen our position as the world's top supplier of aluminum computer disk blanks.
We also have three bases for manufacturing and marketing copper tubing for air conditioners. This network includes Kobe Steel in Japan, Kobe Copper Products, Inc., in the United States, and Kobe Copper (Malaysia) Sdn. Bhd. in Malaysia. Through this network, we are responding to demand for copper tubing in various regions of the world.
We foresee a continued rise in domestic demand for aluminum and copper due to a growing need for aluminum for lightweight products and robust demand for copper as an electronic material. We also anticipate sharp growth in overseas demand for aluminum and copper, primarily in Asia. While responding to this demand, we intend to cultivate new markets by drawing on our strong technology development capabilities. We also intend to strengthen our overall international competitiveness in such areas as cost, product quality, and customer service and to fortify our position as one of Japan's leading producers of aluminum and copper products.