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Kobe Steel, Tokyo Gas form MOU for power generation business in Moka, Japan

March 31, 2014

TOKYO, March 31, 2014 - Kobe Steel, Ltd. and Tokyo Gas Co., Ltd. today entered into a memorandum of understanding for Kobe Steel to sell to Tokyo Gas all the electricity generated by a gas-fired power station that will be constructed in Moka, Tochigi Prefecture, Japan. Kobe Steel began an environmental impact assessment for the power station in March 2013.

Kobe Steel and Tokyo Gas will continue discussions for an electricity sale and purchase contract, which they plan to conclude by the end of September 2014.

As previously announced, the power station, which is currently in the planning stage, will be constructed adjacent to Kobe Steel’s Moka Plant at the No. 5 Industrial Park in Moka. The power station will have two 600,000 kW-class gas turbine combined cycle (GTCC) plants that together will yield a generation capacity of 1.2 million kW. Following completion of the environmental impact assessment, construction is anticipated to begin as early as mid-2016. The No. 1 Power Plant is expected to start up in the latter half of 2019, and the No. 2 Power Plant in the first half of 2020. Electricity will be supplied for a period of 15 years after the start of operations.

The power station will use city gas from a gas line that will run from Hitachi in Ibaraki Prefecture to Moka. The gas line, currently under construction, is anticipated to be completed in fiscal 2015. The state-of-the-art facility will have Japan’s highest level of energy efficiency.

This project will be Japan’s first large-scale thermal power station located inland. It is envisaged to contribute to society’s need for a stronger energy infrastructure by dispersing power generation, as well as bolster regional economic development. Kobe Steel was originally planning to supply the electricity to Tokyo Electric Power Co. as an independent power producer (IPP), but decided instead to sell the entire amount to Tokyo Gas.

Through its steel business, Kobe Steel has accumulated over half a century of know-how in operating private power generation facilities. At its Kakogawa Works in Kakogawa, Hyogo Prefecture, Kobe Steel is currently installing two GTCC power plants that use blast-furnace gas as fuel to improve energy efficiency. At the Kobe Works in Kobe, Hyogo Prefecture, Kobe Steel built a coal-fired power station with a generation capacity of 1.4 million kW. Kobe Steel has been supplying The Kansai Electric Power Co., Inc. with electricity since 2002 as a wholesale power business, which contributes to the stable supply of electricity in Kobe.

Making use of this know-how, the Moka power generation plan is one project that will expand Kobe Steel’s power supply business and contribute to building a stable profit base under the company’s Fiscal 2013-2015 Medium-Term Business Plan launched in May 2013. Kobe Steel will steadily carry out the environmental impact assessment and is fully committed to moving this project forward according to plan.

Note: On February 22, 2013, Kobe Steel announced that the power station would consist of two 700,000 kW-class power plants, a total of 1.4 million kW. After considering the details of the equipment specifications, Kobe Steel concluded that 1.2 million kW would be the most rational scale of operation.