Kobe Steel and Angang Steel Sign Agreement for Automotive Sheet Joint Venture in China
The two companies had been conducting a joint study to explore the possibility of establishing a joint venture in China.
The new company, to be called Kobelco Angang Auto Steel Co., Ltd., will construct a continuous annealing line with a production capacity of 600,000 metric tons per year within Angang’s steelworks. Following incorporation procedures to establish the joint venture, plans call for production to begin in early 2016. Total investments are anticipated to reach 1.75 billion yuan (28.9 billion yen).
Kobelco Angang will be headquartered at Angang’s steelworks, Anshan Base, in Anshan, Liaoning Province. The continuous annealing line will make cold rolled high-strength steel with a tensile strength of 590 MPa or higher. Angang will supply the joint venture with the substrate coils. The joint venture will employ about 100 people when it reaches full operation.
The new company will be capitalized at 700 million yuan (11.6 billion yen). Angang will own 51% of the venture. Kobe Steel plans to hold a 49% share through Kobelco (China) Holding Co., Ltd.
China is the world’s largest automobile market. Car production is anticipated to increase by roughly 50% over the next 10 years, the companies say. Governmental guidance is strengthening safety standards and environmental considerations. High-strength steel offers higher stiffness while maintaining safety. Contributing to lighter auto bodies, high-strength steel improves fuel economy. As a result, demand for high-strength steel is anticipated to increase considerably in the future.
Responding to these needs, the new company will combine Kobe Steel’s world-class automotive cold rolled high-strength steel technology with Angang’s solid business base to meet demand for high-strength steel in China. By meeting this demand, the joint venture will also contribute to the economic development of China.
In the U.S., Kobe Steel produces hot-dipped galvanized steel sheet through PRO-TEC Coating Co., a joint venture between Kobe Steel and the United States Steel Corporation. In addition to its two production lines for hot-dipped galvanized steel sheet, PRO-TEC started up a new continuous annealing line in May this year. In Europe, Kobe Steel has a technical alliance with the voestalpine Group for automotive steel sheet. By having a production base for automotive cold rolled high-strength steel in China, Kobe Steel will be able to further promote the global expansion of high-strength steel sheet, covering Japan, North America, Europe and China.
A basic policy of Kobe Steel’s medium- to long-term business vision, KOBELCO VISION “G”, is to expand into growth markets with its high-end “Only One” products. Kobe Steel has received high marks from its customers for its automotive cold rolled high-strength steel sheet, a product in which it excels. The establishment of the new joint venture is clearly in line with these policies. Building a global network demanded by automakers, Kobe Steel is increasing its supply capabilities for high-strength steel sheet.