Kobe Steel to Sell Metal Powders Business

Kobe Steel, Ltd. has reached agreement to sell the business of its U.S.-based subsidiary Kobelco Metal Powder of America, Inc ("KOMPA") to North American Höganäs, Inc., a subsidiary of Sweden's Höganäs AB. The agreement was signed on July 9 in Pennsylvania, USA.

The agreement calls for KOMPA, located in Seymour, Indiana, to shift production and marketing of its steel powder to North American Höganäs over a brief period as customers transition to the material made by the subsidiary of the Swedish group. During this period, KOMPA will produce steel powder products under consignment from North American Höganäs. KOMPA expects to cease powder production in spring 2009 upon completion of transitioning its customers' requirements to North American Höganäs.

To support the smooth transition to North American Höganäs, KOMPA and North American Höganäs will form a new company called KHTech Inc. This joint venture company will provide technical services and sales support primarily to KOMPA's Japanese customers in the United States as well as to its other current U.S. customers. KHTech shall be owned two-thirds by North American Höganäs and one-third by KOMPA.

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