Nippon Steel Reached Basic Agreement with a Canadian Coking Coal Shipper (EVCP) about Obtainment of

Nippon Steel Corporation (President: Mimura Akio)， has reached a basic agreement with Elk Valley Coal Partnership (Head Office: Alberta， Canada， CEO: Jim Popowich， hereinafter ”EVCP”) to acquire a 2.5% interest in the Elkview mine located in the southeastern part of British Columbia， Canada and to jointly expand the said mine. Further， basic agreement was reached for further purchase of coking coal from the said mine. Conclusion of definitive agreements are scheduled around mid-February 2005. POSCO reached similar basic agreements with EVCP at the same time as Nippon Steel.

Specifically， Nippon Steel， POSCO and EVCP will form a new partnership that would own the Elkview mine (Elkview Mine Limited Partnership， hereinafter ”EVMP”)， Nippon Steel and POSCO each having a 2.5% interest in EVMP.

The annual production capacity of the Elkview mine， currently owned and operated by EVCP (a partnership between Teck Cominco Limited (38%) and Fording Canadian Coal Trust (62%))， is expected to increase from 5.6 million tons per annum to 7.0 million tons per annum by 2007， as a result of the equity participation by Nippon Steel and POSCO. Nippon Steel is confident that the expansion and production increase of this mine will contribute to the stabilization of the global coking coal market that is becoming increasingly tight.

Nippon Steel has also reached a basic agreement with EVCP on supply of coal from Elkview and Fording mines over a 10 year period beginning in 2005 totaling approximately 29 million tons. Nippon Steel has been steadily purchasing from both mines since the 1960s， but a new contract contemplated in the basic agreement would increase the volume by approximately 6 million tons in total.

Nippon Steel expects that the above arrangement will contribute in stabilizing the procurement of coking coal and also facilitate the further strengthening of our relations with EVCP and POSCO.

Nippon Steel’s acquisition of interests in EVMP will be implemented through its American subsidiary， Nippon Steel U.S.A.， Inc. (Head Office: New York).
- End -