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Kobe Steel's steel wire company in China to increase capital, plans to start up in February

December 13, 2012

TOKYO, December 13, 2012 - Kobe Steel, Ltd. announces that Shinko Wire Company, Ltd. and Suncall Corporation will take equity stakes in its 100-percent owned steel wire company in China, Kobelco Spring Wire (Foshan) Co., Ltd. (or KSW).

The equity stakes will enable Kobe Wire and Suncall - two of the top-level companies in the industry in terms of manufacturing technology, production management and customer support - to participate in KSW's business operation.

The two companies will bolster KSW's manufacturing technology for the secondary processing of steel wire rod and strengthen the supply system for its product, high-quality steel wire.

Kobe Steel's subsidiary Kobelco (China) Holding Co., Ltd. owned 100 percent of KSW when it was established in January 2012. When capital increase procedures are completed this month, Kobelco (China) Holding. will own 50 percent, Shinko Wire will hold 25%, and Suncall will have 25 percent of KSW.

KSW was established in Nanhai District, Foshan, Guangdong Province, China to manufacture and sell steel wire for high-quality springs. Start-up of production is scheduled for February next year.

The two new joint venture partners will contribute an additional 650 million yen to increase the capitalization of KSW to 1.3 billion yen, doubling the amount of the original 650 million yen invested by Kobelco (China) Holding. KSW, located next to the premises of sister company Kobe Wire Products (Foshan) Co., Ltd., will have a production capacity of 600 metric tons per month.

Automobile production in China is expected to increase over the medium- to long-term future. The world's spring manufacturers have been actively adding production lines and increasing capacity to rapidly expand the production of engine valve springs and other high-quality springs. The production of high-quality springs requires the use of high-quality steel wire. As a result, demand for high-quality steel wire is growing.

Kobe Steel's steel wire rod, the base material used in making high-quality steel wire, has received high acclaim from Japanese, U.S. and European automakers. The growing market in China led Kobe Steel to establish KSW.

With the participation of Shinko Wire and Suncall, Kobe Steel plans to build a strong supply system in China that can meet the market in terms of quality, competitiveness and flexibility. Through KSW, Kobe Steel aims to meet the growing demand for high-quality steel wire in China.

Background Information

Profile of Shinko Wire Company, Ltd.

Location:
Amagasaki, Hyogo Prefecture, Japan
Established:
March 1954
President:
Takanori Kominami
Capital:
8,062 million yen
Shareholding:
Kobe Steel, Ltd. 30.71%, treasury shares 11.24%, Shinko Wire client stock ownership 3.77%, Metal One Corporation 3.35%, Mizuho Bank, Ltd. 2.57%, other 48.36%
Employees:
About 800 (consolidated)
Business:
Manufacture and sale of steel wire, wire rope and other products

Profile of Suncall Corporation

Location:
Kyoto, Japan
Established:
June 1943
President & C.E.O.:
Shigetsugu Yoshida
Capital:
4,808 million yen
Shareholding:
Itochu Corporation 24.98%, The Master Trust of Japan, Ltd. (Kobe Steel, Ltd.) 14.88%, treasury shares 7.08%, The Sumitomo Trust and Banking, Co., Ltd. 2.94%, Bank of Kyoto, Ltd. 2.26%, other 47.86%
Employees:
About 2,070 (consolidated)
Business:
Manufacture and sale of automotive parts, electronic and information components, and optical communication components

Profile of Kobe Wire Products (Foshan) Co., Ltd.

Location:
Foshan, Guangdong Province, China
Established:
November 2004
Chairman:
Shinya Miyawaki
Capital:
725 million yen
Shareholding:
Kobe Steel, Ltd. 60%, Metal One Corporation 19%, Sugita Wire, Ltd. 10.5%, Kyodo Shaft Co., Ltd. 10.5%
Employees:
About 80
Business:
Manufacture and sale of CHQ wire and cold finished steel bar

Kobelco (China) Holding Co., Ltd.

Location:
Shanghai, China
Established:
January 2011
President:
Hiroshi Umeda
Capital:
US$59.44 million
Shareholding:
Kobe Steel, Ltd. 100%
Employees:
22
Business:
China headquarters