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Baotou Showa Rare Earth High-Tech New Material to be Dissolved

July 30, 2015

Showa Denko (SDK) (TOKYO:4004) announces that it has decided to dissolve its consolidated subsidiary Baotou Showa Rare Earth High-Tech New Material Co., Ltd. (BSR), located in Baotou, Inner Mongolia, China.

1.Reasons for dissolution

The Showa Denko Group has two bases in China to produce rare earth magnetic alloy, namely, BSR and Ganzhou Zhaori Rare Earth New Materials Co., Ltd. (GSR), in Ganzhou, Jiangxi Province. Till now, BSR has been procuring rare earth materials from mines in China, producing magnetic alloy and selling that to Japanese and Chinese markets since its establishment. However, since 2012, when the Chinese government terminated export duty exemption for rare earth magnetic alloy, BSR’s sales to customers in Japan have been significantly reduced. Thus, BSR’s business environment is much harsher than before.

Under these circumstances, SDK and its partners have concluded, after mutual consultation, that it is difficult to continue BSR’s operations. Thus, SDK and its partners have agreed to dissolve BSR. SDK will concentrate its production and sales of rare earth magnetic alloy in China into GSR.

2.Outline of BSR

Name Baotou Showa Rare Earth High-Tech New Material Co., Ltd.
Head office No.1 Shuguang Road, Baotou Rare-Earth High & New Tech. Industrial Development Zone, Inner Mongolia, China
Establishment October 2002
Capital stock 1,000 million
Ownership Showa Denko K.K. 60%
  China Northern Rare Earth Group High-Tech Co. Ltd. 30%
  Tokai Trade Co., Ltd. 10%
Representative President: Nobuhiko Kawamura
Scope of business Production and sales of rare earth magnetic alloy
Production capacity 1,000t/y

3.Financial impact of dissolution

The loss deriving from this dissolution will have only slight influence on SDK’s business results.

4.Future prospect

After making applications for dissolution to the relevant government authorities, SDK and its partners will dissolve and liquidate BSR without delay. SDK will aim to accelerate development of new-generation rare earth magnetic alloy, and strengthen its sales activities in China.

Media contact:
Public Relations Office (Phone: 81-3-5470-3235)

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