Novelis Announces Successful Completion of Kobe Steel Joint Venture

SEATTLE (Scrap Monster): The Korean subsidiary of Novelis Inc. - the global leader in aluminum rolled products and the world's largest recycler of aluminum, has announced successful completion of transaction towards its strategic joint venture partnership with Japanese Kobe Steel aimed at optimizing production at the Ulsan, South Korean aluminum smelter facility.

Earlier in May this year, Novelis Korea and Kobe Steel had announced their decision to enter into an agreement to establish a joint venture called Ulsan Aluminum Ltd. Since then, both the firms have been actively involved in completing necessary arrangements to set up the new company. The Novelis press release stated that all the arrangements have now been completed and the deal has closed.

As part of the deal, Novelis has sold 50% of its ownership interest in Ulsan facility for a sum of $315 million. Henceforth, both the companies will jointly own and operate the facility. Novelis Korea and Kobe Steel will be equally responsible for ensuring metal supply and building commercial relationships. The facility will continue to deliver innovative, value-added products and services to customers.

According to Sachin Satpute, president of Novelis Asia, the joint venture partnership reiterates the company’s continued commitment to create new capabilities to meet increasing demand from automotive industry. As countries across the world go ahead with stricter environmental regulations, the automotive industry is seen rapidly shifting to light weight components, which in turn may boost demand for aluminum products. The ongoing rise in automotive sales in the region will make Ulsan Aluminum a key part of its Asian portfolio along with the South Korean Yeongju facility and the Chinese Changzhou facility. The company will utilize the cash proceeds from the joint venture transaction to carry out major expansions at the plant and also to reduce its net debt, Satpute noted.

Meantime, Jerry Quick, president and CEO of Ulsan Aluminum Ltd stated that prime importance will be given to quality of products and safety of its employees. The facility, located at the industrial hub of Ulsan, South Korea, will continue to supply the local market with innovative aluminum products, much to the benefit of its customers, Quick said.

The Ulsan Aluminum Ltd. currently employs nearly 600 people and has a production capacity of approximately 300,000 tons of rolled aluminum products per year. The plant had recently undergone major expansion, adding furnaces and a hot finishing mill.