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August 6, 2003
Kobe Steel and Alcoa to Refocus Alliance, Expand Joint Development in Automotive Aluminum
TOKYO & PITTSBURGH--(BUSINESS WIRE)--Aug. 6, 2003--Kobe Steel,
Ltd. and Alcoa Inc. today announced an agreement to expand their
aluminum alliance on the joint development of aluminum products for
the automotive market. Due to changes in the business environment, the
two companies also announced that they intend to discontinue both of
their 50/50 joint ventures that produce aluminum can stock used in
making beverage cans. Financial terms of the agreements were not
Building on automotive aluminum
Kobe and Alcoa intend to expand their existing cooperation in
aluminum sheet for global automotive customers by adding R&D efforts
on aluminum extrusions, castings and forgings.
In July 1992, Kobe and Alcoa formed two 50/50 joint ventures to
serve the transportation market. Kobe Alcoa Transportation Products,
Ltd. (or KATP) in Japan undertakes R&D, manufacturing and marketing of
aluminum sheet products aimed at the Japanese automotive industry.
The U.S. counterpart is Alcoa Kobe Transportation Products, Inc.
(or AKTP). AKTP conducts research and development of aluminum sheet
for the automotive industry. AKTP's R&D effort in aluminum sheet
technologies has been effective in supporting carmakers in the United
Car manufacturers value the joint ventures, because Kobe and Alcoa
can provide aluminum sheet based on the same specifications through
them. As a result, demand for automotive aluminum in these markets has
steadily increased. By expanding joint R&D to a wider range of
aluminum products, Kobe and Alcoa can meet the growing demand for
lighter cars and improve their responsiveness to automakers that have
increasingly global operations.
Can stock joint ventures to be restructured
Despite diligent efforts, the can stock joint ventures did not
meet the expectations of either party. Market conditions are extremely
competitive, and both parties believe they can be more effective in
the market by operating independently.
As part of the termination of the can stock ventures, Kobe will
acquire control of the Kaal Japan joint venture from Alcoa. In
exchange, Alcoa will receive Kobe's interest in the Kaal Australia
joint venture. Alcoa will grant Kobe a license to use Alcoa's
technology embedded in the Kaal Japan cold rolling mill. Alcoa has
also agreed to act as a distributor for Kobe's can sheet products in
Asia. Both companies also agreed to continue the supply of aluminum
ingot to the Japan can stock operation for a certain period of time.
In October 1993 the 50/50 joint venture, KSL Alcoa Aluminum
Company, Ltd., began production of aluminum can stock in Japan.
January 1996 saw the start of operations of a second 50/50 can stock
joint venture, KAAL Australia, Pty. Ltd. in Australia.
Alcoa is the world's leading producer of primary aluminum,
fabricated aluminum and alumina, and is active in all major aspects of
the industry. Alcoa serves the aerospace, automotive, packaging,
building and construction, commercial transportation and industrial
markets, bringing design, engineering, production and other
capabilities of Alcoa's businesses as a single solution to customers.
In addition to aluminum products and components, Alcoa also markets
consumer brands including Reynolds Wrap(R) aluminum foil, Alcoa(R)
wheels, and Baco(R) household wraps. Among its other businesses are
vinyl siding, closures, precision castings, and electrical
distribution systems for cars and trucks. The company has 127,000
employees in 40 countries. For more information go to www.alcoa.com.
Forward Looking Statement
Certain statements in this release relate to future events and
expectations and as such constitute forward-looking statements
involving known and unknown risks and uncertainties that may cause
actual results, performance or achievements to be different from those
expressed or implied in the forward-looking statements. Important
factors that could cause actual results to differ materially from
those in the forward-looking statements include Alcoa's inability to
implement the reorganization and achieve cost-savings at the
facilities and other risk factors summarized in Alcoa's Form 10-K for
the year ended December 31, 2002.