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Kobe Steel, U. S. Steel to build new production line for automotive steel

December 2, 2010

TOKYO, December 2, 2010 - Kobe Steel, Ltd. and United States Steel Corporation (NYSE: X) have reached agreement for their equal partnership joint venture, PRO-TEC Coating Company, to build a continuous annealing line to produce high-strength steel for use in automobiles.

PRO-TEC will make what is called cold-rolled advanced high-strength steel (AHSS) and ultra high strength steel (UHSS), both of which are new products for the company. Located in Leipsic, Ohio, US, PRO-TEC has been producing hot-dipped galvanized steel sheet for automakers since 1993. The new continuous annealing line will have a production capacity of approximately 500,000 short tons per year to help meet the growing demand for high strength steel sheet for the automotive market.

Total investment in the project is expected to be approximately $400 million. Construction of the new facility is anticipated to begin in early 2011, with start-up of production in early 2013. Plans call for U. S. Steel to supply the substrate coils for the new line.

The new state-of-the-art line will make cold-rolled AHSS sheet with a tensile strength of 590 MPa. The line will also produce UHSS of 780 MPa and higher. It will be equipped with both advanced water quench equipment - a key factor in Kobe's technological edge in automotive cold-rolled high strength steel - and a rapid gas jet cooling system. The facility will produce a wide range of cold-rolled AHSS currently used in the automobile industry. In addition, the new line will be able to make next-generation high-strength steel products with outstanding formability.

In recent years, the need for high-strength steel used in automotive structural parts has been increasing, as automakers have been requiring stronger vehicle structures to meet tougher crash safety regulations in Japan, North America and Europe. At the same time, cars need to be lighter to improve mileage and reduce exhaust emissions. As a result, automakers are using greater quantities of high-strength steel in the overall automotive body structure.

Through PRO-TEC, Kobe Steel and U. S. Steel have been supplying the latest hot-dipped galvanized high-strength steel sheet, which contributes to reducing the weight of the car underbody, or the “platform.” In recent years, the need for cold-rolled AHSS sheet in the upper body to strengthen the overall vehicle structure has been growing among the Japanese transplants, but suppliers of cold-rolled high-strength steels are limited.

Kobe Steel and U. S. Steel plan to address this need by offering in the North American market cold-rolled automotive high-strength steel of the same quality and grade available in Japan. This project will further strengthen Kobe Steel's global supply network for high-strength steel, covering Japan, North America and Europe.

PRO-TEC currently produces hot-dipped galvanized steel sheet, which includes high-strength steel, for use in automobiles. With a current production capacity of one million short tons per year, PRO-TEC is one of the world's largest facilities that makes high-end automotive coated steel sheet and currently supplies automotive manufacturers in North America and Mexico. PRO-TEC is regarded by its customers as the top supplier of quality steel sheet products.

Outline of the New Project

Total investment: Approximately $400 million
Production capacity: About 500,000 short tons per year
Start-up: Early 2013
Product: Cold-rolled automotive high strength steel sheet
(tensile strength of 590 MPa and higher)
Source of substrate coils: U. S. Steel

Profile of PRO-TEC

Name: PRO-TEC Coating Company
President Bryan P. Vaughn
Location: Leipsic, Ohio, USA
Equity share: Kobe Steel 50%, U. S. Steel 50%
Production capacity: 1 million short tons per year
Established: March 1990
Employees: 230
Products: Hot-dipped galvanized steel sheet (pure zinc) & zinc-alloy hot-dipped galvanized steel sheet (for automotive outer panels & automotive high strength steel)
Start-up: May 1993 (No. 1 hot-dipped galvanizing line)
November 1998 (No. 2 hot-dipped galvanizing line)
Main customers: U.S. Detroit Three, Japanese transplants, other car makers

Profile of U.S. Steel

Name: United States Steel Corporation
Chairman & CEO: John P. Surma
Headquarters: Pittsburgh, Pennsylvania, USA
Raw steel capability: 31.7 million net tons, globally
Founded: 1901
Employees: 42,984
Main operations & divisions: Gary Works, Great Lakes Works, Mon Valley Works, Granite City Works, Fairfield Works, U. S. Steel Tubular Products, U.S. Steel Kosice, U.S. Steel Serbia, U.S. Steel Canada (Lake Erie Works, Hamilton Works)

Picture of PRO-TEC Coating Company

PRO-TEC Coating Company