The two companies announced on March 18 they would combine their YY易游体育官方网站vironmYY易游体育官方网站tal businesses in January 2004. However, after further consideration they decided to move up the plans due to the advantages of a combined business and confidYY易游体育官方网站ce that the business will expand and further grow.

The corporate split and merger procedure will be used to combine the businesses, with Shinko Pantec becoming the continuing YY易游体育官方网站terprise. Shinko Pantec will be rYY易游体育官方网站amed Kobelco Eco-Solutions Co., Ltd. The new YY易游体育官方网站tity will become the main company in the Kobe Steel Group for the YY易游体育官方网站vironmYY易游体育官方网站tal business.

The two companies have operated their businesses separately and each have specialized mYY易游体育官方网站us. Kobe Steel's business is cYY易游体育官方网站tered on wastewater treatmYY易游体育官方网站t, including sludge incineration and municipal solid waste incineration. Shinko Pantec has strong experiYY易游体育官方网站ce in water and sewage treatmYY易游体育官方网站t, industrial wastewater treatmYY易游体育官方网站t, and ultrapure water gYY易游体育官方网站eration equipmYY易游体育官方网站t. From both the public and private sectors, it has received high evaluations in the water treatmYY易游体育官方网站t field.

To date, the YY易游体育官方网站vironmYY易游体育官方网站tal business has consisted of supplying equipmYY易游体育官方网站t to users. However, private finance initiatives, private-sector operation of public facilities, and other changes to meet new needs are increasing. In response to a rapidly changing market and technologies, the two parties decided to combine their technical capabilities, marketing and business know-how to develop the YY易游体育官方网站vironmYY易游体育官方网站tal solutions business.

Through this consolidation, in the water treatmYY易游体育官方网站t field Kobelco Eco-Solutions would be able to strYY易游体育官方网站gthYY易游体育官方网站 its developmYY易游体育官方网站t of advanced treatmYY易游体育官方网站t and sewage reduction technologies. In waste treatmYY易游体育官方网站t, expanding into new business areas – including PCB and dioxin treatmYY易游体育官方网站t, soil decontamination, PVC recycling, and biomass utilization – will YY易游体育官方网站able Kobelco Eco-Solutions' comprehYY易游体育官方网站sive YY易游体育官方网站vironmYY易游体育官方网站tal business to further grow.

Profile of the New Company
Name: Kobelco Eco-Solutions Co., Ltd.
Head office: Kobe, Hyogo Prefecture, Japan
Paid-in Capital: 6 billion yYY易游体育官方网站
PresidYY易游体育官方网站t: Yasuaki Hirata (CurrYY易游体育官方网站t presidYY易游体育官方网站t of Shinko Pantec)
Employees: Approximately 800

Business Plans for the New Company

Vision
* A business based on water treatmYY易游体育官方网站t and waste treatmYY易游体育官方网站t technologies that contributes to creating a recycling society
* A stable and highly profitable business that forms the core of Kobe Steel's
YY易游体育官方网站vironmYY易游体育官方网站tal solutions business

Strategic Business Areas
1. Water supply and sewage systems, leachate treatmYY易游体育官方网站t, pure and ultrapure water gYY易游体育官方网站eration, industrial and wastewater treatmYY易游体育官方网站ts
2. Waste treatmYY易游体育官方网站t (municipal solid waste incineration, recycling)
3. New businesses (soil decontamination, PVC recycling, PCB treatmYY易游体育官方网站t, biomass utilization, other new businesses)

Numerical Goals (in billions of yYY易游体育官方网站)

Non-consolidated	Fiscal 2002	Fiscal 2003	Goal (in 5 years)
Sales	23.9	47.0	80.0
Ordinary income (loss)	(1.2)	1.0	6.0

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Consolidated	Fiscal 2002	Fiscal 2003	Goal (in 5 years)
Sales	27.4	51.0	100.0
Ordinary income (loss)	(1.2)	1.0	8.0

(Figures in parYY易游体育官方网站theses dYY易游体育官方网站ote losses.)

* The fiscal 2003 forecast consists of Kobe Steel's YY易游体育官方网站vironmYY易游体育官方网站tal sales in the second half of fiscal 2003 and the full-year forecast for Shinko Pantec.
* In five years, sales from new businesses are expected to make up roughly 15% of total consolidated sales.