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Kobe Steel's U.S. aluminum forging unit to increase production

Demand continues growing for automotive suspension parts

March 12, 2007

TOKYO, March 12, 2007 - Kobe Steel, Ltd. announces that its U.S. subsidiary, Kobe Aluminum Automotive Products, LLC (or KAAP), will further increase production of aluminum forgings to meet the growing U.S. market for lightweight automotive suspension systems.

The Bowling Green, Kentucky-based company will invest $14 million (1.6 billion yen) to add a fourth mechanical forging press and associated equipment. Production is scheduled to begin April 2008.

Since KAAP's start-up in June 2005, production of aluminum forgings has continued to expand. Strong demand required KAAP to install a second forging press in April 2006 and a third press in December the same year. KAAP currently manufactures 190,000 pieces per month. On confirmed orders alone, KAAP's No. 3 forging press is expected to reach full operation in the first half of 2008. KAAP anticipates that demand will continue to increase in the future as aluminum is being considered in new car applications, primarily by Japanese automotive transplants.

When the No. 4 forging press goes into operation, KAAP's production capacity will rise to 280,000 pieces per month, a 33% increase. Fitted with more safety devices and options, cars have been growing heavier, while having to clear stringent environmental regulations. American and Japanese automakers are turning to forged aluminum suspensions, which are about 40% lighter than suspensions made of steel castings. They also contribute to improved drivability and ride quality.

About Kobe Aluminum Automotive Products LLC
Kobe Aluminum Automotive Products, LLC is 60% owned by Kobe Steel, 25% by Mitsui & Co., Ltd., and 15% by Toyota Tsusho Corporation. Based in Bowling Green, Kentucky (USA), KAAP employs 180 people. The president is Takumi Fujii. Sales in 2006 were approximately $30 million and are forecast to rise to $70 million in 2008. Capital investments to date amount to roughly $66 million (excluding the No. 4 forging press). KAAP has a melting and holding furnace, a continuous casting machine, three 6,300-ton mechanical forging presses, three mechanical trimming presses, two continuous heat treatment furnaces, and an automatic penetrant inspection line.

Kobe Aluminum Automotive Products, LLC in Bowling Green, Kentucky

6,300-ton mechanical forging press