CSC-Sumitomo sign contract for new joint venture

CSC-Sumitomo sign contract for new joint venture

The largest Taiwanese steel maker China Steel Corp. (CSC) reached an agreement with Sumitomo Metal Industries Ltd. (SMI) to compensate the shortage of slabs experienced in Taiwan. This agreement signed between two companies allows for regular supply of slabs ex Sumitomo Metal's Wakayama Works till 2012, by when one of the two blast furnaces will have to be relined. Under such agreement, it is planned to export 1.8 million ton per year. Wakayama Works have two blast furnaces over 3 million ton annual capacity, which will continue to run until 2012. Thereafter, both companies will sit down and re-study the possibilities of extension of agreement or CSC's new blast furnace. According to reports by Chinese officials, CSC and Sumitomo will make a capital investment of $286 million in total. CSC will share 30% of this capital. The joint venture will be set up in Japan. Sumitomo plans to increase its slab supply volume to 1.8 million metric tons after April 2005 from its current level of 600'000 mts. The company will increase its supply to 800'000 metric tons by 2004, and 1.2 million metric tons by 2005.