News Room 2007 (The former Furukawa-Sky)

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Investment in Chinese Magnesium Manufacturer

November 22, 2007

(1) Announcement
Four Japanese companies (Kobe Steel, Ltd., Furukawa-Sky Aluminum Corp., Sumitomo Light Metal Industries, Ltd., and Alconix Corp.) have partnered with TaiYuan YiWei Magnesium Co., Ltd., a major magnesium manufacturer in China, to establish a joint-venture company for the production of magnesium. This new venture is located in Taiyuan City, Shanxi Province, China.
(2) Background and Outline of Joint Venture Participation

The magnesium project in which the four Japanese companies are participating is the same project that Alconix independently announced on August 1, 2007. After Alconix's announcement, three rolled light metal manufacturers (Kobe Steel, Furukawa-Sky Aluminum, and Sumitomo Light Metal Industries) also decided to participate. A joint-venture agreement was concluded between the Chinese partner and the four Japanese participants on October 18, with the joint-venture receiving official approval as a foreign-invested enterprise from the Chinese authorities on November 7.

Current worldwide magnesium production is estimated to be 600,000 tons a year, with China accounting for approximately 80%. Most customers for magnesium base metal in Japan also depend on China, and this dependence is not likely to change in the medium term. The joint-venture participants expect to secure a stable, ongoing supply of Chinese magnesium by investing in this project.

(3) Outline of the Joint Venture Company
  1. Trading Name: TaiYuan JinYi Magnesium Co., Ltd.
  2. Date of Approval as a Foreign-Invested Enterprise: November 7, 2007
  3. Headquarters Address: Yangqu County, Taiyuan City, Shanxi Province, People's Republic of China
  4. Representative Director: Huang Yuwei
  5. Capital: RMB 19,500,000 (¥316,000,000)
  6. Equity Ratios:
    TaiYuan YiWei Magnesium Co., Ltd. 51%
    Kobe Steel, Ltd. 14.7% (30% of the Japanese component)
    Furukawa-Sky Aluminum Corp. 14.7% (30% of the Japanese component)
    Sumitomo Light Metal Industries, Ltd. 9.8% (20% of the Japanese component)
    Alconix Corp. 9.8% (20% of the Japanese component)
  7. Fiscal Year End: December 31
  8. Business Area: Production and sale of magnesium base metal

Plans call for the production facility of the joint-venture to have an annual production capacity of 6,000 tons of magnesium. In addition, the facilities will feature leading-edge technologies for energy efficiency and environmental considerations, including the latest designs incorporating high heat efficiency for the dolomite (ingredient of magnesium) burning process and the reduction furnaces, as well as the use of exhaust gas drawn from the coking plant as a heat source in place of coal, which has conventionally been used.

(4) Outline of the Chinese Joint-Venture Party
  1. Nominal Name: TaiYuan YiWei Magnesium Co., Ltd. (Core business of the TaiYuan YiWei Magnesium Industry Group).
  2. Year Established: 1994
  3. Capital: RMB 11,000,000
  4. Annual Production: 64,000 tons
  5. Representative Director: Huang Yuwei
  6. Address: Yangqu County, Taiyuan City, Shanxi Province, People's Republic of China
  7. Business Area: Production and sale of magnesium base metal

The TaiYuan YiWei Magnesium Industry Group plans to produce approximately 84,000 tons of magnesium within the current fiscal year, making it the world's largest magnesium manufacturer.