TOKYO, February 28, 2005 - Kobe Steel, Ltd. announces that it has been awarded a contract to supply a MIDREX Direct Reduction Plant with an annual capacity of 1.5 million metric tons to Qatar Steel Company (Q.S.C.) (or QASCO).  A signing ceremony was held today in Doha, Qatar.

Plans call for the $267.4-million full turnkey project to be completed within 30 months.  Kobe Steel will be responsible for the design, equipment supply and construction of the facility.  The new plant, to be constructed in Mesaieed, will boost production capacity of direct reduced iron (DRI) from 780,000 metric tons to 2.3 million metric tons per year.  

This order represents the 54th plant that will use the MIDREX Direct Reduction Process.  In this process, iron ore pellets are "reduced" to increase their iron ore content to over 80%.  DRI is often used as a supplement or substitute to high-quality scrap in electric steelmaking.  Developed by Midrex Technologies, Inc., a Kobe Steel Group company, the MIDREX^(R) Process is used to produce over two-thirds of the world's DRI.

 Formed in 1974, QASCO originally started out as a joint venture between the Qatari government, Kobe Steel, and Tokyo Boeki, Ltd.  As well as holding equity in QASCO, Kobe Steel was awarded the contract to build the steelworks.  Utilizing export financing through the former Export-Import Bank of Japan (currently the Japan Bank for International Cooperation), QASCO became the first integrated steelworks on the Arabian Peninsula when production began in 1978.  For over 20 years, Kobe Steel supported QASCO in the management, operation and maintenance of its steelworks.  In 1997, Kobe Steel and Tokyo Boeki transferred their equity shares in QASCO back to Qatar.

The facilities at QASCO consist of a MIDREX Direct Reduction Plant, which uses the plentiful supply of natural gas in Qatar to make DRI; electric arc furnaces; continuous casters and bar rolling mills.  Current DRI production capacity, which has nearly doubled from the original capacity of 400,000 metric tons a year, is used to make 700,000 metric tons of steel bars and 300,000 metric tons of billets.  Today, QASCO has grown into one of the leading steelmakers in the Middle East.

The sharp rise in energy demand from Asia is increasing oil and gas revenue in the Gulf countries, which are using the income to build up their industries and invest in infrastructure.  As a result, steel is in short supply on the Arabian Peninsula.

To meet the high demand for steel in the region, QASCO plans to boost production.  As part of the expansion plan, Kobe Steel was awarded the new contract to supply a second DRI plant based on its long association with QASCO.  Other suppliers will provide a new electric arc furnace, billet caster and bar mill.  The entire expansion plan is estimated to total approximately $422 million.  Through these investments, QASCO will be able to increase the production of steel bars and billets by an estimated 1.2 million metric tons per year.

Worldwide, strong steel demand and a tight scrap market have sparked interest from steelmakers for direct reduction (DR) plants, which do not need to be used in conjunction with blast furnaces.  Blast furnaces require massive investment and large-scale facilities and use expensive coking coal.  In comparison, DR plants are compact and can be put up at a lower cost.  The MIDREX Process uses natural gas as the reductant, making it a process highly advantageous in areas with abundant reserves of natural gas.  

In particular, demand has recently grown for larger MIDREX Direct Reduction Modules with capacities of 1.5 million metric tons per year or more.  In December 2004, HADEED (Saudi Iron & Steel Company) in Saudi Arabia ordered a 1.76-million-metric-ton-per-year DR Plant.  In January 2005, Midrex clinched an order with Lion Diversified Holdings Bhd in Malaysia to supply equipment and technology for a 1.54-million-metric-ton-per-year MIDREX Plant.  On February 18, Gazmetall's Lebedinsky GOK of Russia signed a contract for a MIDREX Plant with a capacity of 1.4 million metric tons per year.  Talks are underway with other prospective users in Oman and South America.

Kobe Steel and Midrex offer a broad menu of direct reduction and ironmaking technologies to meet the flexible needs of steelmakers worldwide.  In addition to the gas-based MIDREX Process, the FASTMET and FASTMELT processes use steam coal as the reductant, instead of more expensive coking coal, to make direct reduced iron.  A revolutionary ironmaking techonology, ITmk3, yields high-purity iron nuggets, a type of pig iron, from low iron-content ore.

Midrex Technologies, Inc.

Midrex Technologies, Inc. is principally known for the MIDREX Direct Reduction Process that converts iron ore into high-purity direct reduced iron (DRI) for use in steelmaking, ironmaking, and foundry applications.  MIDREX plants produce over two-thirds of the world's DRI.  Midrex is a wholly owned subsidiary of Kobe Steel, Ltd.  For more information on Midrex, visit www.midrex.com

Notes:
MIDREX, FASTMET and FASTMELT are registered trademarks of Midrex Technologies, Inc.
ITmk3 is a registered trademark of Kobe Steel, Ltd.