Nippon Steel’s Combination Transport Arrangement with Rio Tinto　and Newly Built Large Carrier Contra

Nippon Steel Corporation (President: Akio Mimura)， as part of its program for improving the fleet of carriers， has been implementing various measures to gain long-term stability and greater freight competitiveness in hauling raw materials from long distance sources， such as Brazilian iron ores.

Recently， Nippon Steel and Rio Tinto Shipping (headquartered in Melbourne， President: Lindsay Dove， 100% owned by Rio Tinto) have each reached an agreement with Nippon Steel Shipping Co.， Ltd.， a consolidated subsidiary of Nippon Steel， concerning the combination transport utilizing the vessels in possession of Nippon Steel Shipping.

The combination transport by both companies will substantially reduce empty-cargo ratios of vessels， making an efficient， competitive and stable transport possible on a long-term basis. Also， this arrangement is the result of joint studies conducted under the ”Basic Agreement on Comprehensive Alliance between Nippon Steel and Rio Tinto” (announced on April 7， 2004)， raising expectations of further strengthening the relationship between both companies.

Moreover， relative to the transport of Brazilian iron ores， Nippon Steel has been considering the introduction of a large ore carrier of the world’s largest scale， making most of the port facilities of Oita Works and Kimitsu Works that can accommodate 300，000DWT-class vessels. In addition to the 320，000DWT carrier whose introduction has already been agreed with Mitsui O.S.K. Lines， Nippon Steel has come to an agreement about the construction and long-term COA of two more large carriers (320，000DWT and 300，000DWT) with Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha， Ltd..

Nippon Steel， currently purchasing 11 million tons a year of Brazilian iron ores and pellets， has entered into a basic agreement with Companhia Vale do Rio Doce， (headquartered in Rio de Janeiro， President: Roger Agnelli) in respect of a long term purchase of iron ore with a view to procuring 7 million tons a year of iron ore for a period of 10 years (announced on May 17， 2004).

Nippon Steel’s above combination transport with Rio Tinto Shipping coupled with the building of 300，000DWT-class large carriers are believed to be a big step forward in assuring long-term stability and further improved freight competitiveness in the procurement of raw materials from sources in the countries on the Atlantic Ocean， such as Brazilian ores.

For the transport of Australian iron ores and coals from the Pacific Ocean area， Nippon Steel continues to strive to improve freight competitiveness yet further by utilizing the existing long-term COA contracts with Japanese shipping companies for seven 230，000DWT-class large ore carriers plus six 100，000DWT bulkers which serve Nagoya Works exclusively to save costs of unloading at multiple ports.

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