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Kobe Steel Expanding, Modernizing Titanium Processing

Modernized closed-die hammer to be complete by May

January 30, 2007 — Kobe Steel Ltd. is planning a series of investments it estimates at more than $41 million to improve and expand manufacturing facilities for titanium products.

In one of the projects, the company will upgrade its counterblow hammer used for closed die forging at Takasago in Hyogo Prefecture. Japan's largest counterblow hammer, it is used to manufacture closed die, titanium alloy forgings for jet engine disks and other applications. The investment will go into computer control and stabilization of the hammer blow energy. The revamped hammer is expected to start up in May 2007

Kobe Steel will also construct a new titanium melting shop at its Takasago Works in Hyogo Prefecture in western Japan to be completed in January 2008. The new melt shop will be built adjacent to the current melt shops to stabilize production and improve operational efficiency. Production capacity is anticipated to increase 30% to 40%. The new shop will use the company's proprietary "Kobe method" (vacuum arc remelting method), which makes possible the use of titanium scrap. Kobe Steel intends to make the new facility the most cost competitive melt shop in Japan. Kobe Steel has also started mulling a further capacity increase.

It will also construct a new welded tube line at group company Kobe Special Tube Co., Ltd. in Shimonoseki, Yamaguchi Prefecture. This project is scheduled for completion in May 2007.

Completed last month was an expansion of the continuous annealing-pickling line for titanium sheet at Kakogawa Works in Hyogo Prefecture.

The projects will increase the integrated production capacity of titanium mill products, enabling Kobe Steel to manufacture more titanium alloy forgings for next-generation aircraft engines and meet the growing demand in China and the Middle East for pure titanium products used in infrastructure projects. The capital investments cover Kobe Steel's titanium production facilities at all locations including Takasago Works, Kakogawa Works and Kobe Special Tube. Under its Fiscal 2006-2008 Medium-Term Business Plan, Kobe Steel is aiming to increase sales and add further value to its "Only One" upper-end products.

Japan's titanium industry has been undergoing strong growth in recent years, and production and shipments of titanium mill products are anticipated to be robust in fiscal year 2006, ending in March 2007. In addition to Japanese manufacturers, this trend is similar worldwide. Bolstered by rising aircraft orders and growing demand from the energy industries, demand for titanium products is brisk.

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