Nippon Steel, CVRD Enter into Strategic Alliance

Nippon Steel announced on Monday the firm signed a strategic alliance agreement with Companhia Vale do Rio Doce (CVRD). The alliance includes potential joint development of coking coal and iron ore resources and other cooperation in ferroalloy, transportation and joint research and development. They already agreed for 5 year contract of annual 700,000 tonnes of additional pellet supply starting fiscal 2007. Nippon Steel tries to improving stable procurement through the alliance with CVRD, which expands the business to coking coal and nickel.

CVRD is in feasibility study to develop coking coal resource in Mozambique. Nippon Steel considers some cooperation with CVRD for the project including coking coal purchase and joint development. Nippon Steel and CVRD also study for potential joint development of iron ore resources.

Nippon Steel, which has 25% interest in pellet joint venture with CVRD, NIBRASCO and purchases annual 2 million tonnes of pellet from the venture, decided to purchase additional pellet from CVRD. Nippon Steel launches joint study with CVRD for development of higher valued pellet product.

Nippon Steel entered into alliance with Rio Tinto in 2004 including joint development of iron ore and coking coal along with joint transportation and R&D for lower grade resources. Nippon Steel is also in alliance with BHP Billiton in joint transportation and R&D studying potential joint development of raw materials.