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Kobe Steel comments on media report

May 23, 2007

Kobe Steel has been expanding its "Only One" high-end products and improving its manufacturing capabilities, based on its Fiscal 2006-2008 Medium-Term Business Plan formulated last year,. To increase business opportunities, Kobe Steel has been strengthening its activities in overseas growth markets, which include China and the United States. With regard to overseas business, Kobe Steel evaluates the various risks and proceeds under careful consideration.

On May 23, 2007, a Japanese newspaper wrote an article entitled "Kobe Steel to Enter India With Low-Cost Production Tech." The article gave the impression that Kobe Steel had reached a concrete decision on undertaking a steel business in India. However, this is untrue.

The "Production Tech" mentioned in the article refers to Kobe Steel's next-generation ironmaking technology, called ITmk3. This business does not entail the production and sale of steel products. Rather, the focus is on supplying production technology and plants that make iron nuggets for use by mining companies and electric arc furnace steelmakers. In India, there is a need for high-quality iron units, such as iron nuggets, made from Indian iron ore. For this purpose, Kobe Steel is currently holding talks with India's Chowgule Group, which has mining interests, on the possible sale of an ITmk3 plant and supply of ITmk3 technology, etc. The talks are still ongoing. In addition to Chowgule, Kobe Steel seeks to promote the ITmk3 Process to other steel companies and mining companies that can make use of this technology.

Kobe Steel is considering the construction of the first commercial ITmk3 plant in North America. It is also planning to market the technology in the BRIC countries and Australia.