Kobe Steel Group to reform construction machinery business operation,
Plans to form new company - Kobelco Cranes - on April 1

TOKYO, February 17, 2004 - Kobe Steel, Ltd. and its subsidiary Kobelco Construction Machinery Co., Ltd. plan to turn the crane operation at Kobelco Construction Machinery into a 100% owned subsidiary of Kobe Steel. The new company will be called Kobelco Cranes Co., Ltd.

Kobelco Construction Machinery, centered on the excavator business, and Kobelco Cranes will each operate as independent businesses. Separating the crane segment will speed up decision-making and implementation as well as promote globalization of the business. Creating a management system responsive to changing business conditions and specific to the industry is anticipated to increase profitability and corporate value.

Plans call for Kobelco Cranes to be established on April 1, 2004. The new company will carry on the manufacturing and sale of crawler cranes, rough terrain cranes, civil engineering machines, work vessels and other machines. To be based in Tokyo, Kobelco Cranes will be capitalized at 12 billion yen, which will include additional paid-in capital, and employ 270 people. The president will be Takashi Ishida.

Kobelco Cranes will be a world center for crawler crane technology. The new company plans to develop global products and meet regional needs as it aims to become the world’s top crawler crane manufacturer.

In Japan’s construction crane market, the total value of crane shipments is anticipated to rise in the year ending March 2004, the first increase in seven years. Overseas, sales in the Americas and Europe are high, and Kobelco is maintaining the same level of sales as the previous year in these markets.

To enlarge its sales and profits in the crane business, Kobelco Construction Machinery formed an OEM agreement last year to supply the Manitowoc Crane Group of The Manitowoc Company, Inc. with a range of crawler cranes for the American market from fiscal 2004. Manitowoc is one of the world’s largest providers of lifting equipment.

Both Kobelco Construction Machinery and Kobelco Cranes will operate as independent businesses with each company having its own decision-making criteria. Plans also call for the formation of a management council for the two companies, which will enable the Kobe Steel Group to benefit from the synergy derived from the collaborative framework.

Outline of Kobelco Cranes Co., Ltd.

Outline of Kobelco Construction Machinery Co., Ltd.