Mitsui to Invest in Erdos EPM

Mitsui & Co., Ltd.("Mitsui") announced today that it had reached a basic agreement with Erdos Electrical Power & Metallurgical Co., Ltd.("Erdos EPM", head office: Erdos City, Inner Mongolia Autonomous Region, China, President: Linxiang Wang), to acquire a 25% share in Erdos EPM through a third-party allotment of shares newly issued by Erdos EPM and a purchase of Erdos EPM's shares from an existing shareholder. Execution of this investment will take place once all the necessary conditions contained in the basic agreement have been satisfied. The total investment amount is expected to be approximately 18 billion yen.

Erdos EPM was established in 2003 as a member of Erdos Group who has developed its businesses mainly on textiles. In line with China's West Development Strategy, Erdos EPM currently utilizes rich local coal reserves to operate four major businesses around Erdos City in the Inner Mongolia Autonomous Region: power generation, coal mining, ferrous alloy production and water pumping from the Yellow River. Mitsui has developed a sound relationship with Erdos Group through cashmere business for nearly 30 years. In 2004 Mitsui set up Inner Mongolia Erdos EJM Manganese Alloy Co., Ltd. together with Erdos EPM and JFE Steel Corporation. Through the equity participation, Mitsui aims to further strengthen its successful partnership with Erdos EPM, focusing on the ferrous alloy and coal businesses.

This equity participation represents Mitsui's largest ever investment in a single project in China. Mitsui will assist in the stable supply and the marketing of ferro-silicon and other ferrous alloy products in Japan and other export markets. Mitsui also envisages gaining a foothold in the power generation and coal development businesses in China through this investment, thus contributing to the economic development of the Inner Mongolia Autonomous Region in accordance with China's West Development Strategy.

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