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Kobe Steel expanding titanium capacity

March 8, 2012

TOKYO, March 8, 2012 - Kobe Steel, Ltd. announces that it plans to increase its production capacity of titanium alloys for the aerospace sector and commercially pure titanium for general industry. Investments are anticipated to total 7.5 billion yen, of which 1.5 billion yen is allocated for the joint venture Japan Aeroforge, Ltd.

Kobe Steel plans to construct a new ring rolling mill and install heat treatment and inspection equipment for large forged products at its Takasago Works in Takasago, Hyogo Prefecture in western Japan. Group company Kobe Special Tube Co., Ltd., a 100% owned subsidiary of Kobe Steel, has already completed a titanium welded tube line in Shimonoseki, Yamaguchi Prefecture, also in western Japan.

Titanium demand is anticipated to expand over the medium- to long-term future owing to strong worldwide demand for civilian aircraft and infrastructure demand in emerging countries, such as for power generation and desalination plants. Japan's total shipments of titanium mill products reached 19,358 metric tons in 2011 (ended December 2011), the second highest since 2008. Of this amount, a record 13,245 metric tons were exported.

Through the capital investments, Kobe Steel will be able to increase and improve its production capacities for ring products for aircraft and large forgings made of titanium alloys, as well as welded tube made of commercially pure titanium. The additional capacity will enable Kobe Steel to enhance business opportunities for the growing titanium market.

In September last year, Kobe Steel developed precoated titanium sheet and high heat transfer titanium sheet for use in plate heat exchangers. Expanding its production capacity and strengthening its ability to meet user needs, Kobe Steel's Titanium Division plays an important role in contributing to the company's medium- to long-term business vision, KOBELCO VISION "G."

Kobe Steel pioneered the production and commercial application of titanium in Japan, when in 1949 it became the first company to begin research on this lightweight material. Kobe Steel is Japan's only integrated producer of titanium mill products with operations ranging from melting to mill product manufacturing. The company supplies numerous titanium products to a wide variety of industries.

1. Construction of new ring rolling mill at Takasago Works
Location: Takasago, Hyogo Prefecture
Start-up: November 2012

As the current ring rolling mill at Takasago Works is over 20 years old and aging, Kobe Steel decided to build a new ring rolling mill. By installing new equipment for high precision rolling, Kobe Steel can utilize near-net-shape ring rolling and achieve a considerable reduction in forging weight. This is anticipated to reduce costs and increase orders for rings used in jet engines. By constructing the new ring rolling mill, Kobe Steel's ring rolling capacity is anticipated to double. The current ring rolling mill will be shut down after the new mill receives certification.

2. Installation of heat treatment and inspection equipment for large forgings at Takasago Works
Location: Takasago, Hyogo Prefecture
Start-up: April 2013

Kobe Steel plans to install heat treatment and inspection equipment for large forgings to be manufactured by Japan Aeroforge, Ltd., a joint venture with Hitachi Metals, Ltd. and other partners. This investment will expand sales to domestic heavy industry manufacturers of large titanium forgings.

In the future, Japan Aeroforge hopes to provide overseas aircraft manufacturers with forgings. The heat treatment and inspection equipment to be installed is aimed at meeting processing capacity, as well as specifications from aircraft manufacturers. Production capacity will increase three-fold.

Titanium billets made at the Takasago Works will be supplied to Japan Aeroforge for die forging. The semifinished forgings will then be returned to Takasago for heat treatment and inspection before being shipped to customers.

3. Expansion of titanium welded tube line at Kobe Special Tube Co., Ltd.
Location: Shimonoseki, Yamaguchi Prefecture
Start-up: In operation since August 2011

Kobe Special Tube added a new line at Japan's largest titanium welded tube plant. The added capacity will help meet the growing demand for welded tube for power plants in emerging countries and desalination plants in the Middle East.

The new line enables Kobe Steel Tube to gain more orders by providing the additional capacity necessary for large projects. Integrated production from ingot melting to welded tube manufacturing enables the Kobe Steel Group to supply high-quality titanium welded tube. This investment increased production capacity 25 to 30%.

To bolster the annealing capacity of the base material for the new welded tube line at Kobe Special Tube, Kobe Steel increased the capacity of its vacuum annealing equipment for sheet at its Kakogawa Works in Kakogawa Hyogo Prefecture. The new line went into operation in December 2010.