Press release

Capital market-relevant press releases May 11, 2007 12:57 PM

ThyssenKrupp Supervisory Board gives green light to steel mill in the USA

The Supervisory Board of ThyssenKrupp AG today approved the €3.1 billion investment in a steel mill to be operated jointly by the Steel and Stainless segments in Mount Vernon in the US state of Alabama. The plant is scheduled to start operation in 2010. Due to its high cost efficiency, Mount Vernon is the ideal location. The joint plant will employ 2,700 people and generate at least 38,000 indirect jobs in the region over the next 20 years. Executive Board Chairman Dr. Ekkehard Schulz: “This project is a central element of the Group’s strategy for the Steel and Stainless segments, aimed at achieving profitable growth in Europe and North America. It will considerably strengthen ThyssenKrupp’s position in North America.”

North America is one of the biggest volume markets for high-grade flat carbon steel. ThyssenKrupp Steel is strongly positioned in the market for flat carbon steel and occupies leading positions in a number of specific segments. The company offers technological advantages for demanding customers, coupled with a favorable cost structure. ThyssenKrupp Steel will leverage these advantages in North America. The region is currently the world’s biggest importer of flat steel and will continue to rely heavily on imports in the future.

Low-cost slabs will be supplied from the new steel mill in Brazil. The €3 billion facility near Rio de Janeiro is scheduled to start production in 2009 with a capacity of 5 million tons of slabs per year. At the same time ThyssenKrupp is building the most advanced plant of its kind in North America to process these slabs. Schulz: “This combination of cost and quality leadership can only be achieved with the new steel mill. At the same time, ThyssenKrupp is investing over €700 million to strengthen its German facilities and its market position in Europe.” The special feature of the steel mill is that it will be a combined plant for flat carbon steel and stainless steel.

The project in the USA is a central element of ThyssenKrupp Stainless’ growth strategy. This strategy is aimed at both securing the company’s position in its European core market and exploiting options on other interesting markets. Through direct entry to the USA, the Stainless group aims to sustainably expand its business in North America. Significant growth is forecast for the USA, Canada and Mexico. Experts predict average growth rates of over 3 percent per year in the NAFTA region up to 2012. ThyssenKrupp Stainless intends to participate in this growth of the North American market.

In recent years, ThyssenKrupp Stainless has established an outstanding position in the NAFTA region. The Stainless group is already active on the North American stainless market through its Mexican cold rolling operation ThyssenKrupp Mexinox in San Luis Potosí and through imports from its plants in Germany, Italy and China. Distribution is handled by a highly-efficient Chicago-based operation. The new plant will enable ThyssenKrupp Stainless to sustain its high share of the fast-growing Mexican market and significantly strengthen its position in the USA and Canada.

The central element of the new plant will be a jointly used hot strip mill with a capacity of up to 5.2 million metric tons per year. It will process 3 million tons of slabs from the new ThyssenKrupp CSA steel mill in Brazil and produce 4.1 million metric tons of flat carbon steel end products per year. Cold rolling and hot-dip coating capacities will also be installed for premium carbon steel end products.

In addition, ThyssenKrupp Stainless will build an electric steel plant with a capacity of up to 1 million metric tons of slabs per year which will be rolled on the hot strip mill. A cold rolling facility is also to be erected which, in the first phase, will be designed to produce 350,000 tons of cold-rolled strip and 125,000 tons of pickled hot-rolled material. A further 340,000 tons of stainless hot-rolled produced on the hot strip mill will be supplied to the ThyssenKrupp Mexinox cold rolling facility in San Luis Potosí (Mexico).

The level of investment will be €2.3 billion at ThyssenKrupp Steel and €0.8 billion at ThyssenKrupp Stainless. The original investment volume of €2.3 billion was raised to €3.1 billion because higher capacities and extended plant configurations were shown to be feasible and economic. Beyond the original model, ThyssenKrupp Steel will install additional equipment to further diversify its product portfolio. ThyssenKrupp Stainless will increase its capacity and broaden its flat stainless steel product mix. In the future the company will also be able to supply products in widths of 72 inches, giving it a unique position on the US market.