Joint Venture for Steel Wire Rod Processing to be Established in Mexico

A joint venture has been established between Shinsho Corporation and Kobe Steel, Metal One Corporation; Osaka Seiko Ltd; Mexico's Grupo Simec, S.A.B. de C.V.; and O&K American Corporation in the United States to produce cold heading (CH) steel wire.

The new joint venture will be called Kobelco CH Wire Mexicana, S.A. de C.V. (or KCHM) and will process steel wire rod into CH steel wire for sale to automotive parts manufacturers in Mexico. CH steel wire is used to make automotive fasteners and cold-forged products.

KCHM, which will be headquartered in the Santa Fe Industrial Park in Silao, Guanajuato, Mexico, will be headed by president Mitsufumi Konishi from the Shinsho Corporation. Total investment is anticipated to reach approximately US$41 million (4.3 billion yen). KCHM will be capitalized at US$11.9 million (1.2 billion yen).

Shinsho is anticipated to hold 40% of KCHM; Metal One, 25%; Kobe Steel, 10%; Osaka Seiko, 10%; Simec, 10%, and O&k American, 5% .

When it reaches full production, the JV will employ around 80 people. Operations are due to start at the end of 2015.

The 40k/yr plant will have wire drawing machines, pickling equipment and heat treatment furnaces.

Mexico's car production of 1.5 million cars in 2009 rose to 2.93 million units in 2013. Solid growth is anticipated in the coming years as many Japanese auto parts manufacturers are setting up operations in Mexico.

Demand for CH steel wire is likely to be high and there is expected to be a growing need for local sourcing of this material.

According to Kobe Steel, by producing in an area of increasing demand, 'KCHM will be able to quickly supply CH steel wire of outstanding surface quality and contribute to expanding the business of its customers'.

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