Kobe Steel is to radically restructure its steel business as it faces an extremely harsh business environment making is necessary to implement radical changes to strengthen the company's competitiveness.
The company will embark on large scale investments including a new hot metal treatment plant, a new heat treatment furnace for steel plate, and high efficiency in house power generation plant. Construction of these investments has already commenced.
Upstream production at Kobe Works will be transferred to Kakogawa Works around fiscal 2017. This will involve the closure of the blast furnace at Kobe Works.
A new continuous bloom caster and secondary refining equipment will be installed at Kakogawa Works. The company will also increase the production capacity of the No 2 Bloom Mill. Once these capital investments are completed and stable operation and quality has been achieved, Kobe Steel will close the blast furnace and other upstream production at Kobe Works. This move will eliminate surplus production capacity in upstream operations and increase cost competitiveness.
The new, state of the art continuous bloom caster at Kakogawa Works will make use of Kobe Steel's production technology and knowhow for special steel gained at Kobe Works. The new bloom caster and secondary refining equipment, essential for the production of high grade steel, will further strengthen competitiveness in quality and ability to meet deliveries. The company will also be able to expand sales of special steel wire rod and bar, automotive high strength steel sheet, heavy steel plate for the energy sector, and other original high end products.
To make practical use of the land on which the blast furnace stands Kobe Steel will consider the possibility of expanding its power supply business. By initiating structural reforms in the steel business and expanding the power supply business, Kobe Steel aims to improve its profit structure and build a stable profit base.
The company will post approximately 18.5bn yen (US$192.7M) of impairment loss as an extraordinary loss on a nonconsolidated and consolidated basis in the first quarter of fiscal 2013 as a result of the restructuring.
