Overseas Expansion of Permanent Magnetic Retarder Business:
Sumitomo Metals Begins to Develop New Model of Permanent Magnetic Retarders through Joint Venture with Voith Turbo in Germany

Sumitomo Metal Industries, Ltd. (Sumitomo Metals) announces that it formed a joint venture with Voith Turbo GmbH & Co. KG (Voith Turbo) in Germany in January 2008 aimed at promoting the business of permanent magnetic retarders(*1) abroad and has started to develop a new model. The permanent magnetic retarder is our unique secondary brake for commercial vehicles such as trucks and buses.

1. Outline of the Joint Venture
(1) Company Name: Voith Turbo SMI Technologies, GmbH & Co. KG
(2) Business: Development, production, and sales of the new model of the permanent magnetic retarder
(3) Head Office: Heidenheim, Germany
(4) Capital: 1,100,000 euro
(5) Shareholders: Voith Turbo 51%, Sumitomo Metals 49%

2. Objectives of the Joint Venture
The exhaust brake has conventionally been used as equipment to assist the brake of heavy-weight trucks and buses. However, due to environmental concerns regarding the reduction of carbon dioxide, improvements in fuel consumption, and other factors, the size of engine displacement has become smaller. This has degraded the performance of the exhaust brake, while the retarder is expected to replace it and be increasingly adopted. The installation rate for all retarders, which are mostly Sumitomo Metals' permanent magnetic retarders, is about 40% in large-sized trucks and buses in Japan .
In Europe and other regions, the hydrodynamic retarder(*2) produced by Voith Turbo is mainly used for trucks and buses of more than 16 tons in weight. However, there has not been any product suitable in size and weight for medium-sized trucks and buses in the weight range of 7.5 tons to 16 tons.

Sumitomo Metals' own permanent magnet retarder has an overwhelming share (about 80% according to Sumitomo Metals' estimates) of the domestic market. In order to expand overseas, the Company has established a joint venture with Voith Turbo, which has a high market share in retarders and well recognized in Europe. By making full use of Sumitomo Metals' technology associated with permanent magnet retarders, we will develop a new downsized lighter model and, by leveraging Voith Turbo's global marketing power and using production facilities in Germany, we aim to start business on a full scale with manufacturers of trucks and buses in Europe and other regions.

3. Future Development
When we launch a full-fledged sales to manufacturers of trucks and buses in Europe and other areas, we aim to sell 10,000 sets per year in 2012 by manufacturing products in Germany, the production base of Voith Turbo.

[Reference]
1. Outline of Voith Turbo
Company Name: Voith Turbo GmbH & Co. KG
Business: Production and sales of parts for transportation machinery, such as automobiles and railroad vehicles.
Head Office: Heidenheim, Germany
CEO: Mr. Peter Edelmann
Shareholders: A fully-owned subsidiary of Voith AG(*3)
Number of Employees: 4,941 (as of the end of September 2007)
Sales: 1,011 million euros (the fiscal year ended September 30, 2007)

2. Sumitomo Metals' Domestic Retarder Business
Production Base: The Railway, Automotive, & Machinery Parts Company's Osaka Steel Works (Osaka, Japan)
Sales Volume: Approximately 13,000 sets per year
Domestic Market Share: Approximately 80% (Sumitomo Metals' estimates)

[Terms]
*1 Permanent magnetic retarder
A device used to slow vehicles down by curbing rotation of the driveshaft, which is the drive axis of a car, by means of strong magnetism exerted by the world's highest-class neodymium permanent magnet developed by the Sumitomo Metals group. It is comparatively small and lightweight, with a small torque.

*2 Hydrodynamic retarder
A device to slow vehicles down by using the resistance of oil, It is comparatively large and heavy, with a large torque.

*3 Voith AG
The unlisted holding company which controls a group of companies engaged in the production of papermaking machines, transportation machine parts, hydroelectric equipment, and other products. It is a Voith family-owned company with annual consolidated sales of 4,190 million euros.