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Nippon Steel and Kobe Steel to Establish Joint Company for Steel Dust Recycling and Direct-reduced Iron Production and Usage

October 2, 2008

Nippon Steel Corporation (Principal place of business: Chiyoda-ku, Tokyo; President: Shoji Muneoka; hereinafter "Nippon Steel") and Kobe Steel Limited (Principal place of business: Chuo-ku, Kobe; President: Yasuo Inubushi; hereinafter "Kobe Steel"), with the objectives of expanding and enhancing their cooperative ties, reached agreement to consider a joint business for recycling of steel dust and production and utilization of direct-reduced iron (hereinafter "DRI") at the end of October last year. The two companies proceeded to consider the joint business and have now entered a contract to establish a joint company.
Summary of the joint business for steel dust recycling and reduced-iron production and utilization
(1) Nippon Steel and Kobe Steel will establish a joint company on the grounds of Nippon Steel's Hirohata Works to produce DRI from steel dust and iron ore powder with the objective of effective use of the iron and zinc content included in steel dust.

Outline of the Joint Company
Company name: Nittetsu Shinko Metal Refine Co., Ltd.
Capital Ratio: Nippon Steel 70%, Kobe Steel 30%
Location: On the grounds of the Nippon Steel Hirohata Works
(Fuji-cho, Hirohata-ku, Himeji, Hyogo Prefecture)
Capital Investment: Approximately 20 billion yen
(Investment will be primarily for a rotary hearth furnace-type reduction furnace and related equipment. Capital investment will commence when the joint company receives approval to recycle steel dust.)
Date of Company Establishment: Mid October, 2008
Planned Start of Operations: Two years after the start of capital investment
(2) After establishment, the joint company will apply to the Ministry of the Environment for approval to recycle steel dust. Upon receiving approval, a new recycling facility will be constructed for the operation of a Kobe Steel FASTMET® Plant using a rotary hearth furnace (hereinafter "RHF"). The joint company will recycle the steel dust it receives and produce DRI to be supplied primarily to Nippon Steel and Kobe Steel with a portion also supplied to Sanyo Special Steel Co., Ltd., Nippon Steel' affiliate.
(3) The RHF, which is the core operating equipment of the FASTMET® Process, is a donut-shaped furnace that recycles steel dust through high-temperature and high-speed processes to produce DRI. The RHF is also able to abstract zinc from steel dust. The DRI will be reused in the steel manufacturing process and the abstracted zinc will be reused in nonferrous processes. Recycling these materials will promote zero emissions while reducing usage of scrap metal, iron ore, and zinc ore.
(4) The annual capacity of the new equipment to be used in the operation will be approximately 400,000 tons, making the facility one of the largest production processing operations in Japan. The economy of scale will increase the cost competitiveness of DRI while providing a complete measure for environmental measures.
(5) The RHF in the new joint company will raise to four the number of RHFs in use on the grounds of the Nippon Steel Hirohata Works. In conjunction with the installation of the fourth RHF at the works, Nippon Steel plans to begin utilizing the No. 1, 2, and 3 RHFs currently in operation or under construction at the Hirohata Works to also improve the processing efficiency of steel dust produced by alliance partners Sumitomo Metal Industries, Ltd. (Wakayama works), Nisshin Steel Co., Ltd. (Kure works), and Nakayama Steel Works, Ltd..

The new operation's configuration as a joint operation between Nippon Steel and Kobe Steel is aimed at securing a stable source of materials and promoting recycling and zero emissions at all of the alliance members. At the same time, the combination of Nippon Steel's proven operating technologies for recycling and effective usage of steel dust and Kobe Steel's proven RHF technology will strengthen the mutual advantages of the relationship between the two companies, while including the alliance members will create a new business model for improving the overall efficiency of steel dust recycling in the Kansai region.

Nippon Steel and Kobe Steel intend to smoothly advance the new joint business while continuing to actively strengthen and promote their relationship.

FASTMET Process Flow (PDF 56 kb)