Sumitomo, Corus Forming Steel Alliance

Sumitomo Metal Industries Ltd. and Corus Group PLC will form a global comprehensive alliance with a particular focus on research, development and production technology for steel sheet for automobiles, the companies said Thursday.

The Japanese and U.K. steelmakers plan to ally in the area of production technologies for high-strength and coated steel, as well as application technologies for the automotive industry.

They will also tie up in production technologies for automotive-use engineering steels, and the development of improved free-cutting engineering steel, they said.

The alliance reflects the ongoing expansion of Japanese carmakers' operations in Europe, the companies said.

In addition to the automotive-steel business collaboration, the two companies are also considering allying in construction-use steel products, they said.

The steelmakers will set up a semi-annual committee to decide on future programs of work and to monitor their progress, they said.

"Sumitomo's near-term interest (under the latest alliance) is to supply products of our own or of Corus to the European bases of Japanese carmakers and thereby maintain our presence," Sumitomo Metal Vice President Mikio Kato told a news conference.

The British partner will be able to produce and supply steel sheet at lower costs by capitalizing on Sumitomo Metal's technological support, said Tomoyoshi Oguchi, deputy general manager of the steel sheet division at Sumitomo.

The latest agreement between the steelmakers, both of which are undergoing restructuring amid intensifying global competition, doesn't include a mutual shareholding pact, Kato said. Dow Jones