Japan's Sojitz Secures $53 Million Supply Order for Malaysia's First Stainless Steel Rolling Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--Earlier this month, Japanese trading company Sojitz Corporation (TYO:2768) (Tokyo) received a $53 million supply order for a cold rolling mill that would be used in Malaysia's first cold rolling stainless steel plant. Sojitz will be executing the order jointly with Mitsubishi-Hitachi Metal Machinery Incorporated (Tokyo, Japan), a joint venture between Mitsubishi Heavy Industries Limited (TYO:7011) (Tokyo) and Hitachi Limited (NYSE:HIT) (Tokyo). The supply contract will be implemented on a turnkey basis and includes delivery and installation of the machinery. The stainless steel facility is being developed in the Tanjung Langsat industrial area of Malaysia's Jahor Bahru region by Bahru Stainless Sendirian Berhad (Jahor, Malaysia), which is a 67:33 joint venture between the world's second-largest steel manufacturer, Acerinox SA (MCE:ACX) (Madrid, Spain) and Nisshin Steel Company Limited (TYO:5407) (Tokyo).

Sojitz will deliver a 20HI Sendzimir type of cold rolling mill for which it holds the manufacturing and sales licenses. The mill has a cluster-type roll structure that allows it to roll hard materials such as stainless steel with a high roll separating force. The high control capacity of the mill enables production of high-quality stainless steel plates and sheets. The cold rolling process plays a critical role in the quality of the final product. Mitsubishi-Hitachi Metal Machinery has extensive and in-depth technical expertise in the area. Hitachi will be manufacturing the electrical items required to complete the order.

The first stage of the $1.6 billion project involves an investment of about $320 million that would be used to set up a 240,000-ton-per-year stainless steel cold rolling plant. The plant will produce about 180,000 tons of cold rolled steel and is scheduled to be operational from 2011. The future plans of the joint venture include the expansion of the plant into an integrated stainless steel production facility with a production capacity of 1 million tons per year of stainless steel and 800,000 tons per year of cold rolled steel. According to Rafael Garvin Salazar, Managing Director of Bahru Stainless, the integrated facility will be set up in three phases and will be completed in 2020. The extended plans for the facility include marketing the manufactured stainless steel plates and sheets in Southeast Asia's automotive, building material, and consumer electronics sectors. Of the output, 70% will be exported, while 30% will be sold in the domestic market.

With this project, Acerinox will be able to make an entry into the stainless steel markets of Asia, which includes the member states of the Association of Southeast Asian Nations (Jakarta, Indonesia). The project will increase Acerinox's global production capacity by almost 25% and will also help the company increase supply to the European market as the company's two production units in Spain have only limited expansion abilities.

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