TOKYO, September 9, 2004 - Kobe Steel, Ltd. plans to make major capital investments in its steelmaking facilities to increase its competitiveness in distinctive, value-added products.

Plans call for the construction of a new continuous bloom caster at Kobe Works in Kobe, Hyogo Prefecture to increase the productivity of specialty steels. With a production capacity of 720,000 metric tons per year, the new caster is scheduled to go into operation in September 2006. Capital investment is anticipated to be 8.5 billion yen, including remodeling of the building and related work.<

Kobe Steel has also begun a detailed study on relining Kobe Works' No. 3 blast furnace, which is currently in operation. The relined blast furnace is anticipated to go into operation in fiscal 2007.

At Kakogawa Works, also in Hyogo Prefecture, Kobe Steel plans to bring back into service the No. 2 blast furnace, after blowing out the No. 1 blast furnace. The No. 2 blast furnace will be rebuilt to have an inner volume of about 5,400 cubic meters. Work is to be completed by March 2007. The No. 3 blast furnace will remain in operation. Capital expenditure is expected to reach 40 billion yen, which includes remodeling the old No. 2 blast furnace and installing new equipment. The remodeled No. 2 blast furnace will be blown in, based on the condition of the No. 1 blast furnace, which has been in operation since January 1988.

Production System at Kobe Works
The new No. 5 continuous caster will produce high quality blooms, a semi-finished product, to make specialty steels. The new equipment will enable distortions to be kept to a minimum during the solidification stage. It will also maintain top-class surface and internal quality under high-speed casting. When the No. 5 caster goes into operation, the No. 4 continuous caster, one of two in operation, will be shut down. The No. 5 caster is to start up in September 2006.

Another project is the relining of the No. 3 blast furnace at Kobe, which has been in operation for the past 21 years. The company has put together a project team to work on the details of the project. The relined No. 3 blast furnace is expected to go back into service in fiscal 2007.

Wire rod and bar are core products of Kobe Steel. The main production facility for these products is Kobe Works. Kobe's wire rod and bar products are processed into numerous automotive parts. Typical examples are bolts, nuts and shafts; engine valve springs; suspension springs; gears; and bearings. To make each part with the same uniformity requires advanced production technologies to produce high-quality specialty steels.

Supported by the steady growth of finished automobiles in Japan and knock-down production overseas, demand for high-quality specialty steel is currently strong. With the rise in automobile production in Asia, centered mainly on China, Kobe Steel intends to increase its presence as a reliable supplier of high-quality specialty steel in the Asian market.

To meet these requirements, Kobe Steel has already completed work on its downstream operation in 1999, the remodeling of the No. 7 wire rod mill. The mill now provides higher dimensional accuracy, high loads at low rolling temperatures, and improved cooling through the use of a 90-meter conveyor.

Production System at Kakogawa Works
The No. 1 blast furnace at Kakogawa Works has been in operation since January 1988, a period of 16.5 years. Plans call for the remodeling and restart of the inactive No. 2 blast furnace, blown out in 1996. The No. 2 blast furnace will have an inner volume of about 5,400 cubic meters, in comparison to the No. 1's 4,550 cubic meters.

The inner profile of the blast furnace will be optimized to ensure stable operation at a higher coal injection rate and lower coke rate, and to enable greater usage of lower-cost raw materials, thus contributing to greater cost reductions.

Kobe Steel aims to extend the working life of the blast furnace to 25 years by adopting high thermal conductive carbon refractory bricks at the bottom of the furnace, copper staves in the cooling equipment, and fully utilizing its operational know-how.

Kakogawa Works, Kobe Steel's main steelworks, makes a wide variety of distinctive products including sheet, plate and wire rod. Representative sheet products are high strength steel sheet, which contributes to lighter vehicles and improved safety, and special chemical-treated sheet with new functions such as fingerprint resistant and heat-releasing properties. As for steel plate, Kakogawa produces high strength TMCP plate noted for its high control of residual stress. Less deformation arising in gas-cutting and welding operations contributes to more precise fabrication accuracy. In the wire rod field, Kobe Steel supplies ultra clean wire rod for steel cords in tires. As the wire rod is eventually drawn to a diameter of 0.2 mm, inclusions must be thoroughly eliminated.

Increase in Distinctive Steel Products
These projects at Kobe and Kakogawa Works are part of Kobe Steel's ongoing Fiscal 2003-2005 Medium-Term Business Plan to increase its ratio of distinctive, high-quality steel products to 40% in fiscal 2005, from 30% in fiscal 2002.

In addition to improving business earnings by strengthening the supply of distinctive, high-quality steel products, these strategic investments will increase the cost competitiveness over the medium- to long-term future as blast furnaces need to be rebuilt about once every 20 years. Kobe Steel intends to carry out these strategic projects, which will improve the business earnings, or flow, of its distinctive, high-quality steel products.

Diagram of Continuous Caster

No. 3 blast furnace at Kobe Works, 
Kobe Steel, Ltd.