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Kobe Steel establishes steel wire processing company in China

January 24, 2012

TOKYO, January 24, 2012 - Kobe Steel, Ltd. announces that it has established a company in Foshan, Guangdong Province, China to make steel wire for use in high-quality springs.

The new company, called Kobelco Spring Wire (Foshan) Co., Ltd. (or KSW), will begin operations in the first half of 2013. To shorten construction time and reduce investment costs and overhead, KSW will be located within the premises of sister company Kobe Wire Products (Foshan) Co., Ltd.

KSW will receive technical assistance from Shinko Wire Company, Ltd. and Suncall Corporation for the secondary processing of steel wire rod.

KSW was established in January 2012 and is capitalized at 650 million yen. It will have a production capacity of 600 metric tons per month. The company is a wholly owned subsidiary of Kobelco Holding (China) Co., Ltd., Kobe Steel's China headquarters.

In recent years, automakers in China have been rapidly increasing production. In addition, the automobile industry, along with current exhaust gas regulations, is being pressed to reduce carbon-dioxide emissions. In the future, automakers will be required to make smaller and lighter cars, while improving engine combustion efficiency.

On this background, in China the world's major spring manufacturers have been actively adding new production lines and increasing capacity to make engine valve springs and other high-quality springs. Kobe Steel anticipates that demand for high-grade steel wire for springs made from its wire rod - highly evaluated by automakers in Japan, the United States, and Europe - will increasingly grow.

When KSW begins operating, plans call for steel wire, which is exported, to shift to local production to meet market demand for automotive springs in China. Through the establishment of KSW, Kobe Steel aims to meet the growing demand for high-quality steel wire in China. It plans to build a local supply network that can meet the market in terms of quality, competitiveness and flexibility.

Background Information

Profile of Kobe Wire Products (Foshan) Co., Ltd.

Location: Foshan, Guangdong Province, China
Established: November 2004
Chairman: Shinya Miyawaki
Capital: 725 million yen
Shareholding: Kobe Steel, Ltd. 60%, Metal One Corporation 19%, Sugita Wire, Ltd. 10.5%, Kyodo Shaft Co., Ltd. 10.5%
Employees: About 80
Business: Manufacture and sale of CHQ wire and cold finished steel bar

Profile of Shinko Wire Company, Ltd.

Location: Amagasaki, Hyogo Prefecture, Japan
Established: March 1954
President: Takanori Kominami
Capital: 8,062 million yen
Shareholding: Kobe Steel, Ltd. 30.71%, treasury shares 11.24%, Shinko Wire client stock ownership 3.77%, Metal One Corporation 3.35%, Mizuho Bank, Ltd. 2.57%, other 48.36%
Employees: About 800 (consolidated)
Business: Manufacture and sale of steel wire, wire rope and other products

Profile of Suncall Corporation

Location: Kyoto, Japan
Established: June 1943
President & C.E.O.: Shigetsugu Yoshida
Capital: 4,808 million yen
Shareholding: Itochu Corporation 24.98%, The Master Trust of Japan, Ltd. (Kobe Steel, Ltd.)  14.88%, treasury shares 7.08%, The Sumitomo Trust and Banking, Co., Ltd. 2.94%, Bank of Kyoto, Ltd. 2.26%, other 47.86%
Employees: About 2,070 (consolidated)
Business: Manufacture and sale of automotive parts, electronic and information-related products, and optical communication devices

Kobelco (China) Holding Co., Ltd.

Location: Shanghai, China
Established: January 2011
President: Hiroshi Umeda
Capital: US$59.44 million (as of January 2012)
Shareholding: Kobe Steel, Ltd. 100%
Employees: 16
Business: China headquarters