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158845
Thu, 02/03/2011 - 18:10
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Nippon Steel, Sumitomo Metal to merge in Oct. 2012

TOKYO, Feb. 3 Kyodo - Nippon Steel Corp. and Sumitomo Metal Industries Ltd. said Thursday they plan to merge by Oct. 1, 2012, creating the world's second largest steelmaker in terms of crude steel production capacity.
The biggest and No. 3 steelmakers in Japan are expected to take advantage of the merger to enhance their domestic bases and competitiveness and jointly explore overseas markets to counter fast-growing Chinese steelmakers and catch up with the world's leader ArcelorMittal based in Luxembourg.
''We would like to integrate business resources to accelerate our global strategy,'' Nippon Steel President Shoji Muneoka told a news conference. ''The two companies could combine their production bases at home and abroad to create a global production and sales network.''
''We will seek to develop into one of the world's largest integrated steelmakers,'' Muneoka said.
As steel demand has been growing in emerging countries, Nippon Steel and Sumitomo Metal will place top priority on overseas demand.
The merger is expected to help the two companies strengthen their bargaining power in negotiations with iron ore and coking coal producers amid fast hikes in prices of these steelmaking materials.
Nippon Steel Chairman Akio Mimura and Sumitomo Metal Chairman Hiroshi Shimozuma called on Chief Cabinet Secretary Yukio Edano on Thursday evening to request government support for the merger.
The merger plan indicates ''the management teams' determination to survive global competition,'' Prime Minister Naoto Kan told reporters.
Economy, Trade and Industry Minister Banri Kaieda welcomed the planned Nippon Steel-Sumitomo Metal merger as serving as a ''pioneer case'' for the promotion of industrial reorganization to create globally competitive companies.
Over the recent years, the world has seen the global steel industry realignment including the creation of ArcelorMittal and the consolidation of Chinese steelmakers.
Nippon Steel and Sumitomo Metal have formed a capital alliance and integrated their production of stainless steel products in recent years. Nippon Steel has a 9.4 percent stake in Sumitomo Metal, while Sumitomo Metal holds 4.2 percent of Nippon Steel shares.
Nippon Steel fell to sixth place in 2009 from second place in 2008 in global crude steel production rankings as its output plunged on a global recession from late 2008, Britain's Metal Bulletin reported last June.
Instead, China's Hebei Iron & Steel Co. rose from sixth place to second after ArcelorMittal, followed by Chinese firms Baosteel Group Corp. and Wuhan Iron & Steel (Group) Corp. South Korea's Posco was in fifth place.
Although the combination of Nippon Steel and Sumitomo Metal output in 2009 was the fourth largest, the two firms said their combined output in 2010 came to the world's second largest level at 47.8 million tons including 34.48 million tons for Nippon Steel and 13.32 million tons for Sumitomo Metal.
The two firms now have no specific capacity consolidation plans, Sumitomo Metal President Hiroshi Tomono told the press conference.
Nippon Steel was created in a merger between Yahata Steel and Fuji Steel in 1970. In fiscal 2009 to March 2010, its group sales totaled about 3.5 trillion yen. Its employees numbered 52,205 at the end of the year.
Sumitomo Metal, founded in 1949, reported group sales in fiscal 2009 at some 1.29 trillion yen. Employment totaled 24,000 workers.

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