Establishment of Joint Venture to Manufacture and Sell Forged Parts for Wind Power Generation

Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President: Kuniharu Nakamura), The Japan Steel Works, Ltd. (Head Office: Shinagawa-ku, Tokyo; President: Ikuo Sato; hereinafter “JSW”) and Gerdau S.A. (Head Office: Porto Alegre, Rio Grande do Sul, Brazil; hereinafter “Gerdau”), the largest steelmaker in Brazil, have established a joint venture which shall engage in the manufacture and sale of forged parts for wind power generation, namely, Gerdau Summit Aços Fundidos e Forjados S.A (Head Office: Pindamonhangaba, Sao Paulo, Brazil; hereinafter “Gerdau Summit”).

The registration of Gerdau Summit was completed in January 2017, following a basic agreement on major terms and conditions among the investors in January 2016. On March 28, 2017 a commemorative ceremony was held in the headquarters of Gerdau Summit, attended by nearly 100 guests from Japan and Brazil who came to offer their congratulations, including the mayor of Pindamonhangaba, existing customers and potential customers.
 
Gerdau shall engage in the manufacture and sale of forged parts for wind power generation as an extension of Gerdau’s existing business of manufacturing and selling forged and cast products.
 
Currently, the wind power generation ratio out of national total power supply in Brazil is around 7% which is expected to reach 11% in 2020, supported by the policy to encourage the installation of new wind power generation announced by Brazilian government. The country has around 430 wind farms in operation and another 330 are expected to be built by 2020. In order to capture the promising outlook of the wind power industry in Brazil, Gerdau Summit is planning to invest R$280 million in the acquisition of new production equipment to install annual production capacity of up to 50,000 tons.
 
Forged and cast parts are essential materials for wide range of industries, and demands for these materials, including demands for forged parts for wind power generation, is expected to increase in line with Brazil and other South American countries’ economic growth.
 
Sumitomo Corporation has gained expertise and built up networks for wind-power-related projects through its infrastructure business and the sale of related components. JSW has long been leading the world’s forging industry with its manufacturing technologies, quality management technologies and know-hows. Based on such experiences, Sumitomo Corporation and JSW will commit themselves to the growth of Gerdau Summit and thereby contribute to the development of the region’s industries and economic growth.