CSC establishes EAU Steel

Taipei, July 15, 2003 (CENS)--The Taiwan-based China Steel Corp. recently announced it has set up East Asia Union Steel Corp. (EAU Steel) in Tokyo in cooperation with Japan's Sumitomo Metal Industries Ltd. And its affiliate Sumitomo Trading.

EAU holds a 100% stake in Upspream Company (UPCO), a steel affiliate of Sumitomo Metal, which specializes in the production of steel billets.

EAU Steel is capitalized at 30.3 billion Japanese yen. Sumitomo Metal has invested 18.8 billion Japanese yen for a 62.05% in the new venture, CSC acquired a 33% stake for 10 billion Japanese yen, to be paid in four stages, and Sumitomo Trading invested 1.5 billion Japanese yen for a 4.95% share. CSC holds one of the five seats on the board of directors of EAU Steel.

The venture is the largest cooperation project between Taiwan and Japanese steel firms.

According to a contract between CSC and Sumitomo Steel, EAU Steel will supply at least 1.8 million steel billets per year to CSC and its affiliate Yieh Loong Steel Corp. The supply of steel billets is expected to help resolve the shortage of raw materials faced by steel firms in Taiwan.

Yieh Long, which specializes in the production of hot-rolled and cold-rolled steel pipes, uses two million to 2.4 million metric tons of steel billets per year. About 600,000 metric tons of the billets are supplied by CSC and the remainder is imported from Japan, mainland China, Russia and other countries.

This is the second cooperative venture between CSC and a well-known Japanese steel firm. The Taiwan steel maker previously allied with Maruichi Steel Tube Ltd. CSC said that the cooperation with the two Japanese firms would help stabilize the domestic iron and steel market, which has been volatile over the past several months.