Study begins for Joint Use of Iron- and Steelmaking Facilities at Wakayama Works of Sumitomo Metal

Nippon Steel Corporation (Principal place of business: Chiyoda-ku， Tokyo， President: MIMURA Akio) (”Nippon Steel”) and Sumitomo Metal Industries， Ltd. (Principal place of business: Chuo-ku， Osaka， President: SHIMOZUMA Hiroshi) (”Sumitomo Metal”) have been studying and implementing various tie-up measures such as mutual cooperation in physical distribution， purchase of raw materials， material and machinery and management of neighboring steelworks for greater cost competitiveness， mutual supply of semi-finished and downstream products during relining of blast furnace and in emergencies， integration of stainless steel and welding materials businesses， tie-ups between respective group companies for strengthening their corporate structures， and supply of hot coils from Nippon Steel to Sumitomo Metal following the restructuring of steel sheet production at Wakayama Works of Sumitomo Metal.

On the other hand， each of the two companies have been doing their best to meet the brisk steel demand in Japan and overseas due to， among other things， the economic growth of China and Asian countries. Under such circumstances， more efficient utilization of the two companies’ existing production facilities to ensure and enhance their respective supply capabilities is deemed important. Nippon Steel and Sumitomo Metal have now agreed to start study of a possible joint utilization of iron- and steelmaking facilities at Wakayama Works on the premises that Nippon Steel will make an equity participation in East Asia United Steel Corporation (Principal place of business: Chuo-ku， Tokyo， President: AMAYA Gashun， Capital: 30.3 billion (as from April 2005)， Shareholders: Sumitomo Metal 62%， China Steel Corporation 33%， Sumitomo Corporation 5%).

Henceforth， the two steel companies wish to formulate soon concrete plans for the joint use of iron- and steelmaking facilities at Wakayama Works to realize a fuller production set-up of the two companies in consultation with the other shareholders of East Asia United Steel Corporation， and further to deepen their alliance through such study.

Nippon Steel and Sumitomo Metal also intend to examine， taking into account the development of the above studies， possibilities of greater cooperation with Kobe Steel， Ltd.， with which each of the two companies is in alliance.