They establishes JV, Erdos Manganese Alloys Co. with US $15 million of capital, in which Erdos has 51% of interests, JFE and Mitsui have 24.5% each, in Inner Mongolia. They construct plant, which has 4 of electric furnaces with 25,500 kilovolt-ampere each of capacity, dust collector and other equipments. The JV will export around 100,000 tonnes of products for Japan and around 50,000 tonnes for China and countries in Far East.

JFE purchases around 100,000 tonnes of silicomanganese per year, of which import from China represents 70%. The firm has considered securing stable supply of the materials under worldwide tight supply when China has limited capacity to export with increasing demand and electricity shortage.

Mitsui as Japanese top silicomanganese importer tries to stabilize supply in Far East area by securing stable supply source of the JV. Mitsui has already long-term relation with Erdos through cashmere producing JV.

Erdos got approval by government to construct thermal power plant using plenty of coal in Inner Mongolia while the firm sought JV partner for silicomanganese plant, which is a part of ferroalloy producing project using the low cost electricity. Erdos posted 290 million yuan of after tax profit with around 4 billion yuan of sales in 2003.

Japanese ferroalloy major, Nippon Denko announced earlier it would construct silicomanganese plant with 50,000 tonnes of annual capacity in Liaoning to start operation in August 2005. The Chinese plant will export 40,000 tonnes of products, some of which are transferring production from Japan, for Japan.

Japan produced 75,000 tonnes of silicomanganese and imported 283,000 tonnes of the material, of which import from China represented 81.6% in 2003. Chinese silicomanganese export price surged and export volume decreased since the end of 2003 with lower export capacity of China. Those Japanese plans represents around 50% of Japanese import volume stabilizing source.

JFE Steel