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Kobe Steel to boost production of compressors in China

July 12, 2011

TOKYO, July 12, 2011 - Kobe Steel, Ltd. announces that its Chinese subsidiary, Kobelco Compressors Manufacturing (Shanghai) Corporation (or KCMS), has increased production capacity at its compressor plant in Shanghai, China. A new manufacturing line in the expanded facility has been completed and has started commercial operation. Approximately 74 million yuan (600 million yen) was invested in the expansion.

Marking the start-up of the new manufacturing line, Kobelco held an opening ceremony at 10 am today. The event was attended by approximately 210 guests. From Kobe Steel, Executive Vice President Kazuo Shigekawa, head of the Machinery Business, participated in the ceremony.

The Kobe Steel Group manufactures standard compressors in three countries: Japan, the United States and China. Starting up in 2005, KCMS markets its compressors in China and Southeast Asia. In 2008, it moved to its current location in Shanghai and increased production capacity. Strong demand has kept KCMS in full operation. To meet the growing market, KCMS added the new manufacturing line, which increases total annual capacity to 3,500 units, from the previous 2,200 units.

Many of the compressor parts are sourced within China, with some models having a local content rate of nearly 90%. However, the screw rotors and other crucial parts are imported from Kobe Steel's Harima Plant in western Japan. KCMS also has its own development unit that enables it to design products adapted to the local market.

Standard compressors are widely used in plant utilities in numerous industries. Demand for compressors has risen sharply in recent years due to strong economic growth in China and other emerging countries. Energy efficiency is a highly important issue as compressors consume a large amount of electricity. Kobe Steel's standard screw compressors have received wide acclaim worldwide for their high efficiency.

Kobe Steel manufactured Japan's first reciprocating compressor in 1915. With a history going back almost a century, Kobe Steel has grown to become Japan's top comprehensive manufacturer of compressors. Under a medium- to long-term business vision called KOBELCO VISION "G" launched in April 2010, Kobe Steel is focusing on growing its global business. In April it opened a new compressor factory at Kobelco Compressors America, Inc. in the United States. Also in April, Kobe Steel opened Beijing Kobelion Kobelco Compressors Corporation, a wholly owned subsidiary in Beijing, China, to market standard compressors. In May, Kobe Steel announced that it had taken an equity share in China's Wuxi Compressor Co., Ltd. This investment provides Kobe Steel with a manufacturing base for process gas (non-standard) compressors in China.

"Sales in our Compressor Division come to about 70 billion yen a year. By 2015, we aim to increase sales to 110 billion yen," said Shigekawa. China is one of our most important markets and will play a strong part in achieving this goal," he said.

"With business accelerating overseas, we're building a solid foundation for our compressor business," said Shigekawa. "Our aim is to be one of the world's top comprehensive manufacturers of compressors."

Profile of Kobelco Compressors Manufacturing (Shanghai)

Name: Kobelco Compressors Manufacturing (Shanghai) Corporation

Jiading District, Shanghai, China

Capital: US$12 million (100% owned by Kobe Steel)
Established: February 2004
Start-up: April 2005
Business: Manufacture of standard compressors
Chairman: Takao Ohama (Officer at Kobe Steel and General Manager of the Compressor Division)
President: Hiroki Iwamoto
Employees: 125 (at the end of June 2011)

picture 1 of Kobe Steel to boost production of compressors in China

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