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SDK Dissolves JV in Low-Carbon Ferrochrome Business

April 18, 2005

Showa Denko K.K. (SDK) has decided to sell its shares in Middelburg Technochrome (Pty) Ltd. (MTC), a joint venture for the production of low-carbon ferrochrome, to the joint venture partner Samancor Limited of South Africa. With this, SDK is completely withdrawing from the ferroalloy business that has formed part of its Inorganic Materials Sector.

Since the establishment of MTC in 1995, Samancor has operated the plant while SDK and Marubeni Corporation, another JV partner, have sold low-carbon ferrochrome in Japan for use as a chromium source in the production of stainless steel and special steels.

However, MTC’s performance has substantially deteriorated due to the sharp appreciation of the South African currency Rand since early 2003. Despite cost reduction efforts, SDK has come to judge that it will be very difficult to rehabilitate the company under the current economic circumstances.

Thus, agreement was reached on March 31 to dissolve the joint venture agreement and to transfer SDK’s shares in MTC to Samancor. This transaction will not influence SDK’s performance for 2005.

As part of the structural reform, SDK dissolved in 2003 Shunan Denko K.K., a consolidated subsidiary for the production of high-carbon ferrochrome. Following the dissolution of MTC and termination of low-carbon ferrochrome sales in Japan, SDK completes the restructuring of its metallic materials business.

For further information, contact:
Carbons & Metallic Materials Division (Phone: 81-3-5470-3510)

[Reference]

Outline of Middelburg Technochrome (Pty) Ltd.

President Jimmy Wilson
Location Middelburg 1050, Hendrina Road Middelburg, South Africa
Ownership Samancor 65.5%; SDK 20.7%; Marubeni 13.8%
Annual sales 298,431,000 Rand (Approx. ¥5,670 million)
(For the period from July 2003 through June 2004)