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SDK Establishes Rare Earth Metal Subsidiary in Vietnam

Showa Denko K.K.
October 8, 2008

Showa Denko K.K. (SDK) has established Showa Denko Rare-Earth Vietnam Co., Ltd. in Ha Nam Province, Vietnam, as its 90%-owned subsidiary. The new company will begin constructing a plant next month for the production of didymium and dysprosium metals. Didymium is a metal consisting primarily of neodymium and praseodymium, and is used as raw material for neodymium-based high-performance magnetic alloys. The plant will start producing 800 tons a year in total of didymium and dysprosium metals in April 2010.

In addition to current applications in automotive parts and electronics, neodymium-based high-performance magnets are expected to be increasingly used in wind power generation. Demand for dysprosium is also increasing, as addition of a small amount of dysprosium ensures high magnetic force of neodymium-based magnets at high temperatures. At present, dysprosium is produced mainly by refining ion-adsorption ore* that occurs in the southern part of China, centering on the Jiangxi Province. Thus, stable procurement of dysprosium and its recycling are critical issues for the electronics industry.

The new plant in Vietnam will produce didymium and dysprosium metals through a separation/refining process and an electrolytic process. The plant will use various raw materials procured inside and outside Vietnam, including rare earth concentrate and rare earth oxides. Annual sales of the new company are targeted at ¥2 billion in 2010.

SDK is currently producing rare earth magnetic alloys at its plant in Chichibu, Japan, and at two subsidiaries in China (Baotou, Inner Mongolia and Ganzhou, Jiangxi Province), with combined production capacity of 8,000 tons a year. With the establishment of the new metal-producing company in Vietnam, SDK will further strengthen its rare earth operation as one of the company's strategic businesses.

*Ion-adsorption ore: An ore containing yttrium and europium (both used as fluorescent substance) as well as neodymium and dysprosium (for use in magnets). The ore occurs in the southern part of China, centering on the Jiangxi Province.

[Reference]

Profile of Showa Denko Rare-Earth Vietnam Co., Ltd.

Location Dong Van 2 Industrial Zone, Ha Nam Province, Socialist Republic of Vietnam
(Approx. 40 km south of Hanoi; along the national highway No. 1)
Capital US$6.36 million (approx. ¥700 million)
Establishment October 1, 2008
Shareholders Showa Denko K.K. (90%); Tokai Trade Co., Ltd. (10%)
Scope of business Production and sale of didymium metal, dysprosium metal, and other rare earth products
Employees Approx. 130
Chairman Akira Ebinuma (General Manager, Rare Earth Division, Showa Denko K.K.)
President Daiken Murakami (Rare Earth Division, Showa Denko K.K.)

Profile of Tokai Trade Co., Ltd.

Head office location 16-13, Akasaka 2-chome, Minato-ku, Tokyo
Capital ¥10 million
Establishment April 2005
Scope of business Trading
President Moto Mitsui

Outline of Showa Denko's rare earth operations

Rare earth magnetic alloy production sites and annual production capacity
Chichibu Plant, Showa Denko K.K. (Japan): 5,000 tons
Baotou Showa Rare Earth Hi-tech New Material Co., Ltd. (China): 1,000 tons
Ganzhou Zhaori Rare Earth New Material Co., Ltd. (China): 2,000 tons
Total capacity: 8,000 tons a year

Rare earth metal production site and annual production capacity
Showa Denko Rare-Earth Vietnam Co., Ltd. (Vietnam): 800 tons

For further information, contact:
IR & PR Office (Phone: 81-3-5470-3235)