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Kobe Steel to Form Aluminum Joint Venture in China
01/04/2012 - Kobe Steel and Jiangsu ALCHA Aluminium Co., Ltd. recently signed a letter of intent to establish a joint venture in Baotou, Inner Mongolia, to produce and sell aluminum coil and sheet. Both companies plan to sign the final agreement in spring 2012.
Kobe Steel, Ltd. has teamed with Jiangsu ALCHA Aluminium Co., Ltd., a producer of aluminum rolled products in China, to expand its aluminum business in China. Kobe Steel and ALCHA recently signed a letter of intent to establish a joint venture in Baotou, Inner Mongolia, to produce and sell aluminum coil and sheet. After conducting a detailed feasibility study, both companies plan to sign the final agreement in spring 2012.
The joint venture, which is planned to be established in January 2013, is expected to be 80% owned by Kobe Steel and 20% by ALCHA. Capital investment is earmarked at approximately 40 billion yen. The company will produce and sell mainly aluminum coil and sheet for automobiles and beverage cans. Production capacity at the joint venture will be approximately 200,000 tonnes per year. The company name is yet to be decided, but the operation will be capitalized at 2 billion RMB (about 24 billion yen). Start-up of operations is anticipated in 2015.
The new joint venture will produce the same high-quality aluminum sheet available in Japan in an integrated operation, from melting and casting to hot rolling and cold rolling. In the hot-rolling and cold-rolling stages, the joint venture plans to install state-of-the-art equipment to produce some of the world's largest aluminum coils. In addition, Baotou in Inner Mongolia, where the plant will be constructed, is close to abundant energy resources.
The partner companies are working on starting up the joint venture, with ALCHA assisting in equipment procurement and permitting. Kobe Steel and ALCHA plan to continue discussions to deepen their future alliance.
The formation of the new integrated operation with ALCHA is expected to help meet China's rapidly rising demand for aluminum sheet. Through the joint venture, Kobe Steel aims to further increase the presence of its aluminum business in Asia.
