core sector communique

Sumitomo Metals Invests and Takes Part in Canadoil Group’s New Steel Plate Mill in Thailand

Sumitomo Metal Industries, Ltd. (Sumitomo Metals) has decided to take part in the Canadoil Group’s steel plate mill business in Thailand by investing in the Group, which is currently constructing a new steel plate mill in the country, and providing technical assistance to the mill.

The new plate mill is scheduled to be operational in 2013 with an annual capacity of around 1.2 million metric tons and with the total investment of approximately US$600 million. Sumitomo Metals has invested US$50 million into the Canadoil Group’s holding company. With this investment Sumitomo Metals will acquire the capacity to manufacture around 0.3 million tons annually from 2013.

High-grade steel plates, including those to be used in the energy field, have long been an area of strength for Sumitomo Metals. In order to respond to expected mid- to long-term growth potential Sumitomo Metals plans to manufacture high-grade steel plates in the new mill and use the Kashima mill capacity to manufacture more value-added, highly-profitable high-grade steel plates. By assigning each mill a specialty in locality-oriented and different product types, Sumitomo Metals will realize a more efficient manufacturing system, which helps us to “accelerate distinctiveness” in our steel plate business and raise corporate value.

1. The new mill in Thailand

	(1)Location	:	Rayong Province, Kingdom of Thailand
			(Approximately 100 km southeast of Bangkok)
	(2)Capacity	:	Approximately 1.2 million metric tons p.a.
	(3)Construction cost	:	Approximately US$600 million
	(4)Schedule	:	To start operation in 2013

2. Canadoil Group
The Canadoil Group, established in 1960s by Mr. Vittorio Sozzi, Chairman, is one of the world’s largest suppliers of piping solutions. Sumitomo Metals has been in a long business relationship with the Canadoil Group, a valued customer of its pipes and steel plates, since 1970s.

	(1)Business	:	Manufacturing of large-diameter pipe, welding joint, and pressure vessel
	(2)Main Business Location	:	Thailand
	(3)Representative (CEO)	:	Mr. Giacomo Sozzi
	(4)Net sales	:	Approximately US$520 million (2009)
	(5)Number of employees	:	Approximately 2,000 (as of the end of June 2009)

Sumitomo Metals Group’s recent investments in steel plate business

Objective	Investment	Timeline	Investment Amount (approximate)
Expansion in production capacity	Added construction of a new heat furnace	2007	7 billion yen
Expansion in heat treatment capacity	Construction of a new heat treatment furnace (Invested by Shearing Kozyo, Ltd.)	2009	3 billion yen
Mass production of ultra-high-strength steel plate	Renewal of one unit of accelerated cooling equipment	2010	(10 billion yen in total)