Joint Venture for Steel Wire Rod Processing to Be Established in Mexico

Shinsho Corporation and Kobe Steel, Ltd. have agreed with Metal One Corporation; Osaka Seiko Ltd; Mexico's Grupo Simec, S.A.B. de C.V.; and O&k American Corporation in the United States to establish a joint venture in Mexico to produce steel wire of cold heading (CH) quality. Called Kobelco CH Wire Mexicana, S.A. de C.V. (or KCHM), the new joint venture will process steel wire rod into CH steel wire for sale to automotive parts manufacturers in Mexico.

CH steel wire is used to make automotive fasteners and cold-forged products KCHM will be headed by President Mitsufumi Konishi, who will come from Shinsho. The company will be established in the Santa Fe Industrial Park in Silao, state of Guanajuato, Mexico. Total investment is anticipated to reach approximately US$41 million (4.3 billion yen). KCHM will be capitalized at US$11.9 million (1.2 billion yen). Shinsho is anticipated to hold 40 percent of KCHM; Metal One, 25 percent; Kobe Steel, 10 percent; Osaka Seiko, 10 percent; Simec, 10 percent, and O&k American, 5 percent.

The joint venture will employee about 80 people when it reaches full production. Operations are to start at the end of 2015. The new plant, with a production capacity of 40,000 tons per year, will have wire drawing machines, pickling equipment and heat treatment furnaces. Mexico's auto production of 1.5 million cars in 2009 rose to 2.93 million units in 2013, and solid growth is anticipated in the coming years. Many Japanese auto parts manufacturers are setting up operations in Mexico. This is anticipated to create substantial demand for CH steel wire, as well as a growing need for a local source of this material. By producing in an area of increasing demand, KCHM will be able to quickly supply CH steel wire of outstanding surface quality and contribute to expanding the business of its customers. (source: KOBELCO)