Nippon Steel, Sumitomo Metals to Merge in 2012

Nippon Steel and Sumitomo Metal Industries announced on Thursday they agreed to start action for integration of their business targeting in October 2012. They discuss the integration with spirit of quality. They accelerate the global strategy by combining resources, consolidation of superiority area and generating synergy. The combined company will be world No.2 steel maker after ArcelorMittal when they produced total 47.8 million tonnes of raw steel in 2010. They seek world top competitiveness not only in volume but also other various aspects including technology, quality and cost for world top class of comprehensive steel maker.

Nippon Steel’s president Shoji Muneoka emphasized the integration is voluntary action by the companies at press conference in Tokyo on Thursday. He said the new company competes with international market aggressively by utilizing all of the resources including human power and investing in growing areas without overlap. Sumitomo Metals’ president Hiroshi Tomono said they make more powerful company to compete globally.

Mr. Muneoka said the new company expands global production and supply network with more speed than before while the company keeps and strengthens the position of advanced technology in the world by extracting possibility of steel as material. The new company utilizes production bases at home and abroad and joint businesses with alliance partners based on their advantages including electrical steel and rail for Nippon Steel and seamless pipe for Sumitomo Metals. Mr. Tomono said the scrap and build is not purpose and potential facility scrap and build depends on the discussion in terms of what is the best for the new company.

The firm improves basic research and development activity and solution in raw materials and environmental issues. The firm tries to improve the cost structure drastically through best available practice, knowhow and technology from the both companies.

They try to improve the competitiveness in other business areas including engineering, urban development, chemical, new materials and system solutions. The new company improves ability of solution proposal to offer all round products and solutions in steel and other business areas. The new company also improves financial position to maximize the corporate value.

They launch the integration committee headed by the presidents to discuss the detail including company name, headquarters, top executives and merger ratio. They propose the integration plan for both companies’ annual general meetings in June 2012.