Kaal produces aluminum can stock for sale to beer and soft drink can manufacturers. Merging Kaal into Kobe will integrate the production of aluminum can stock at Kobe Steel – from ingot melting to final product.

In August, Kobe and Alcoa said that their Kaal joint venture would terminate when Kobe acquired control of Kaal Japan in October. Following the announcement, Kobe began examining ways to improve the business efficiency of Kaal. Kobe concluded that merging Kaal into Kobe at an early opportunity would be the most beneficial for the can stock operation.

Although the Kaal joint venture has terminated, the minority stake in Kaal that Alcoa retained will be exchanged for the equivalent value of new Kobe Steel shares. Alcoa will continue to grant Kobe a license to use Alcoa's technology embedded in the Kaal cold rolling mill. Alcoa has also agreed to distribute Kobe's aluminum can sheet in Asia.

The merger of Kaal into Kobe Steel has been taken into account in the earnings forecast for fiscal 2003, ending March 2004, which was announced on September 9.

Established in December 1990, Kaal began production of aluminum can stock in October 1993 adjacent to Kobe Steel's Moka Plant in Tochigi, north of Tokyo. Kobe's Moka Plant supplies hot rolled coil to Kaal, which then cold rolls it into aluminum can stock.