Kobe Steel, Ltd and China’s Angang Steel Company Ltd, a leading subsidiary of Anshan Iron & Steel Group Complex, signed a joint venture agreement to establish a joint venture in China to produce and sell advanced cold-rolled high-strength galvanised steel sheet for automobiles. 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 install a continuous annealing line with a production capacity of 600kt/y 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 1.75bn yuan (US$28.6M)

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 590MPa 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 700M yuan ($114.4M). 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. 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.

In the United States, Kobe Steel produces hot-dipped galvanized steel sheet through PRO-TEC Coating Company, a joint venture between Kobe Steel and 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.