Toho Titanium to Boost Capacity Through 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--Toho Titanium Company Limited (TYO:5727) (Chigasaki, Japan) is on the upswing. The company, which represents a large share of the global titanium market, owns and operates two titanium sponge plants in Japan: the Chigasaki plant, which is in Kanagawa prefecture near Tokyo, and the Wakamatsu plant, which is in Fukuoka prefecture in western Japan. Titanium sponge is often used in the construction of aircraft, motor vehicles and plants, as well as in the production of semiconductors and liquid-crystal devices.

Due to poor economics, Toho reduced production at the Chigasaki plant in late 2009, but continued with plans to open the Wakamatsu plant. The Wakamatsu site began operations last April, with a maximum capacity of 12,000 metric tons per year; however, production began at half that figure. Despite reduced production, Toho continued with expansion plans, seeing the proverbial light at the end of the tunnel in regards to the world's economic situation, as well as an increase in the global demand for titanium. Toho is in the process of expanding production lines at the Wakamatsu plant and has another in the pipes.

Last month, Toho and Nippon Steel Corporation (TYO:5401) (Tokyo) began construction on a Phase II line expansion at the Wakamatsu plant, with the intent of completing the project within a year. The $47 million expansion will boost Wakamatsu's titanium sponge capacity to 15,600 metric tons per year. Another line expansion is scheduled to commence in the third quarter of next year. That expansion, with a total investment value of $244 million, will increase capacity at the Wakamatsu site by 12,000 metric tons per year, for an annual production total of 27,600 metric tons. Completion is expected mid-2014.

Part of the reason for an increase in production is due to a renewed contract with RTI International Metals Incorporated (NYSE:RTI) (Pittsburgh, Pennsylvania). Toho and RTI renewed their contract for titanium sponge in December 2009, and exports under the new contract are set to begin in 2012. RTI uses titanium sponge to produce a variety of titanium products, but also focuses on developing titanium for applications in medicine, aerospace engineering, and defense.

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