Japanese Steel Companies Aim to Maximize Operations

Nippon Steel Corp., Sumitomo Metal Industries, Ltd., and Kobe Steel, Ltd. have been implementing various tie-up measures such as mutual cooperation in physical distribution, purchase of raw materials, materials and machinery and management of neighboring steelworks, and mutual supply of semi-finished and downstream products during relining of blast furnaces and in emergencies.

In addition, Nippon Steel and Sumitomo Metals have undertaken joint operations in stainless steel and welding materials, and also Nippon Steel and Kobe Steel have integrated their shearing operations as well as supplied semi-finished products to Nakayama Steel Works, Ltd.

All of these cooperative efforts have produced substantial benefits.

Further, this April Nippon Steel and Kobe Steel will commence their supply of hot coils (approximately 500,000 tons/year) on a full scale following the restructuring of steel sheet production at Wakayama Works of Sumitomo Metals.

Based on the solid results of cooperative measures as mentioned above, and with the objective of securing and improving supply capabilities to meet the vigorous demand for steels at home and overseas which has been boosted by the growth in China and other Asian economies, the three companies have been conducting specific studies on the proposed joint use of the existing iron- and steelmaking facilities of Sumitomo Metals since the announcement of such a plan made in January this year.

Premised on the above arrangement for capital contributions to East Asia United Steel, Sumitomo Metals will be facilitating the use of its semi-finished products by the shareholders individually so that both domestic and international demand can be met with greater efficiency.

Sumitomo Metals, while making the maximum use of its existing infrastructure and facilities, will also aim at progressively restructuring its production system, including relining of its blast-furnace at Kashima Works, in order to eventually hold the capacity to supply slabs approximately 1 million tons a year to Nippon Steel and Kobe Steel.

In order to further enhance these cooperative programs in scope and depth, the three companies have decided to conduct studies on the possibility of mutual cooperation in such areas as R&D, intellectual property, procurement, electricity, control and systems, and environment and recycling. Some of the specific areas and subjects for these studies include:

Joint research programs and technical cooperation chiefly in fundamental research and upstream production processes for mutual benefit

Mutually beneficial cross-licensing, effective utilization of the resources of the three companies, and an exchange of information about their respective methods for management of intellectual property.

Measures to achieve yet greater mutual cooperation in, among other things, the stable procurement of raw materials, materials and machinery.

Joint research projects and sharing of spare equipments in the electrical and control areas, and mutual cooperation in the systems area including disaster and emergency response measures.

Mutual cooperation in the fields of environment and recycling, aimed at promotion of measures against global warming and efficient recycling.

Tolling for Nippon Steel and Kobe Steel on Sumitomo Metals' pickling & cold rolling lines at Wakayama, in response to the current brisk demand for steel