Sojitz Corporation


Interests to be Increased in Largest Australian Alumina Project

Jul. 25, 2003

TOKYO(as of July 25, 2003)--Nissho Iwai Corporation and ITOCHU Corporation have agreed to acquire 30% of the issued shares held by business partner Kobe Steel, Ltd. in Kobe Alumina Associates (Australia) Pty Ltd. (KAA), an investment company that invests in the Worsley Alumina Joint Venture carrying out a bauxite excavation and alumina refining project in the Worsley region of Western Australia, located 150 km southeast of Perth. Nissho Iwai and ITOCHU will increase the ratio of their interests in the project, which boasts world-class price competitiveness. As a result, the KAA shareholder equity ratio will be Nissho Iwai 50% and ITOCHU 50%.

Interests in the Worsley Alumina Joint Venture are held by BHP Billiton (86%), KAA (10%) and Nissho Iwai Alumina Pty Ltd (4%). Through increasing their interests in the project, the Nissho Iwai Group will hold a 9% share and ITOCHU will have a 5% share from the perspective of the entire interests of Worsley Alumina. In this project, investors receive alumina output, as the equivalent of interest, in proportion to their respective share holdings. The annual alumina volume to be supplied to Nissho Iwai and ITOCHU therefore will be 288,000 tons and 160,000 tons respectively.

The international demand for aluminum is growing steadily, and both Nissho Iwai and ITOCHU are expanding investments on excellent resources as typified by alumina. On the other hand, Kobe Steel is in the process of promoting a program to focus management resources on its aluminum rolling business. Thus the speculations of both parties match, leading to signing of the agreement.

The Worsley Alumina Joint Venture, which commenced production in 1984, has a bauxite mine site with an area of approximately 2,350 km2, and is currently producing about 3.2 million tons of alumina per annum. Their proven bauxite reserves are 323 million tons, and additional mine sites have been discovered with minable reserves of about 228 million tons. The Worsley Alumina project boasts one of the world's richest reserves, and is expected to have sufficient resources for about 50 years of production.

The project carries out the bauxite excavation and alumina refining processes in a consistent manner, resulting in low production costs. It is therefore said that the project leads the world in price competitiveness.

Nissho Iwai and ITOCHU cite resource development as a core business area. From the viewpoint of securing the most upstream interests in aluminum resources, the companies perceive as extremely meaningful an acquisition of the shares in KAA, particularly as KAA is the only Japanese-affiliated company participating in the securing of interests in bauxite and alumina, most of which interests are otherwise held by major resource development companies overseas. In view of this, the two companies made the decision to increase their interests in KAA.

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