Improper conduct in the Kobe Steel Group

(Improper conduct concerning products with JIS marks, new improper conduct confirmed in self-investigation)

October 20, 2017

Kobe Steel, Ltd.

At this time, with regard to the improper conduct in Kobe Steel, Ltd. and its group companies, we deeply apologize for the enormous amount of trouble we have caused to customers, suppliers, shareholders and many others.

Kobe Steel has contacted nearly all customers with regard to the improper conduct in the Aluminum & Copper Business and other affected business units announced to date. With the cooperation of its customers, Kobe Steel has been making full efforts to confirm whether the nonconforming products used in customers’ products have affected the quality (including safety) of their products. Kobe Steel currently aims to report the result of those efforts by the end of this month. To date, a number of our customers in can and vehicle manufacturing businesses have found no problems with the safety of Kobe Steel’s products. Kobe Steel expresses its deep appreciation for those customers’ work in an effort to assure safety to consumers and other customers. Kobe Steel will continue to work with our customers in order to assure product safety.

Additionally, as to whether there are similar cases of improper conduct, Kobe Steel and its domestic and overseas group companies are currently undertaking self-inspections in order to ascertain whether previously prepared internal inspection reports match with customers’ requested specifications. The self-inspections will also test the products and see whether they meet customers’ requested specifications. Kobe Steel aims to complete these self-inspections at an early possible time.

With regard to the improper conduct at Kobelco & Materials Copper Tube Co., Ltd. (KMCT) including the item announced on October 8, 2017, Kobe Steel reports on the examination undertaken by the JIS certification body, Japan Quality Assurance Organization (JQA), and about the situation. It should be noted that for improper conduct found at each of the group companies, investigation of the facts is being undertaken by the certification body and the investigation is proceeding based on that situation.

1. Improper conduct at the Hatano Plant of KMCT

(Point brought up by JQA pertaining to improper conduct included in items announced on October 8, 2017)

Of the products subject to improper conduct, products displaying the JIS mark have been undergoing examination since yesterday by JQA (Japan Quality Assurance Organization). At this time, the JQA examination procedures are not yet completed, but Kobe Steel has received indication of problems in quality management at KMCT’s Hatano Plant. KMCT has refrained voluntarily from displaying the JIS mark and further shipments. With regard to the concerned products, data on the inspection certificates had been rewritten to meet the JIS standards for tensile strength as well as on the grain size. Inspection results determined that rewriting was conducted to meet stricter in-company standards, rather than JIS standards.

Details on improper conduct concerning products with JIS marks

In the JQA examination underway since yesterday, with regard to products shipped prior to the self-inspection period (September 2016 to August 2017) at KMCT, it was pointed out that products not meeting the JIS standard were found, and further details will be examined.

2. Improper conduct confirmed by self-inspection

Following the report on October 13, 2017, Kobe Steel has as of today confirmed one new item of improper conduct through self-inspection.

Nonconforming products

The effect these incidents will have on Kobe Steel’s business performance is unclear at this time. Kobe Steel plans to make an announcement when extent of the impact becomes clear.

Announcements made to date

1. October 8, 2017:
Improper conduct concerning a portion of the aluminum and copper products manufactured by Kobe Steel
2. October 11, 2017:
Report on improper conduct: the case of steel powder and an inspection company
3. October 13, 2017:
Report on improper conduct concerning Kobe Steel and its group companies
4. October 17, 2017:
The receipt of a request for document production from the U.S. judicial administrative authority


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