Investment for the expansion of production at the Carborough Downs Coal Mine in Australia

Nippon Steel Corporation (Representative Director and President: Shoji MUNEOKA， “Nippon Steel”)， Companhia Vale do Rio Doce (Head Office: Rio de Janeiro， Brazil， President and Chief Executive Officer: Roger Agnelli， “Vale”) and other partners of the Carborough Downs Joint Venture*1 (“Carborough Downs JV”) have agreed that the Carborough Downs JV will invest for the expansion of its underground operation at the Carborough Downs coal mine in Australia.

The total capital investment is estimated to be approximately A$400 million (about 37.3 billion yen*2). The commencement of construction is scheduled for May 2008 and commissioning of the large scale and new mining equipment (Longwall) which will be one of the largest in Australia is expected by mid 2009.

Carborough Downs Coal Mine， where Nippon Steel holds a 5% interest， started its production in August 2006 as one of the new coking coal projects in the State of Queensland， Australia. Since commencement of the production， while continuing its underground operation at small scale， Carborough Downs JV has studied the development option by Longwall method toward larger scale operation.

After completion of the development plan， which is based on the study such as coal quality and geotechnical condition acquired through exploration and operation， Carborough Downs JV has decided the expansion of its underground production by Longwall method.

This investment shall ensure on average 3.7 million tonnes of the annual production for the mine beyond 2009.

Under the current medium-term consolidated business plan (FY2006 through FY2008)， Nippon Steel is striving to enhance overall efficiency in the iron and steelmaking process with reinforcement of key facilities such as the expansion and relining of blast furnaces and installation of a new coke oven and increasing use of low-grade raw materials based on improvement of operational technology.

Further， in terms of raw material procurement， Nippon Steel is seeking to secure stable raw material supply under long-term arrangements， which include investment in mines.

Nippon Steel has decided to implement this investment in the firm belief that it would no doubt contribute to its mid-term strategy for further stability in the procurement of raw materials.

Nippon Steel， cementing relationship with major suppliers， will continue to ensure stable procurement of raw material on a medium and long-term basis.


*1: The Carborough Downs JV is an un-incorporated joint venture formed by the Australian subsidiaries of each party (i.e. Nippon Steel， Vale， POSCO， Tata Steel， JFE Steel and JFE Shoji). The Carborough Downs JV is currently engaged in mining at the Carborough Downs coal mine located about 150km southwest from Mackay， QLD.

*2: Each party in the Carborough Downs JV will bear the cost in proportion to its percentage interest respectively.